• 18
  • March
    2011

People with disabilities, and the people who take care of them (if necessary), need to make a priority of having specific and knowledgeable financial and estate planning. Disabled individuals are entitled to benefits from federal and state programs that pay medical costs, help pay for housing and cover other needed services. But they need to make sure that their estate planning is structured in a way that will ensure they remain eligible for Medicaid and Supplemental Security Income.

Under federal and state laws, anyone 18 or older with disabilities becomes ineligible for certain benefits if their assets exceed $2,000. To navigate around that, a special needs trust must be created so that the disabled individual does not own the assets.

Financial and estate planning is critical to preserve the disabled individual's access to public aid.

It is estimated that fifty-four million adults have a mental or physical disability. That is close to 20% of the population. More than 6% of American children between the ages of five and 15 suffer from a disability.

Special needs trusts can be directed in two ways: institutionally and individually. When a court orders a special needs trust in the case of damages awarded to an accident victim, this is called an institutional or first party special needs trust.

An individual special needs trust, is just that, created by a family member who has a dependent with special needs and wants to ensure that dependent's quality of life.

The two types of trusts are funded differently. An institutional trust is funded with a court-awarded settlement. The trustees monitor the needs of the trust's beneficiary.

Individual trusts can be funded with a family's own assets, but insurance policies are popular sources of funding as well. Military benefits or Social Security survivor benefits can fund a trust.

There are many approaches to choosing a trustee. It is advisable to choose someone whose values are similar to the person setting up the trust. It may also be a good idea to have a fiduciary or co-trustee relationship with a bank.

Every situation is different, which is why Florida special needs trust attorneys recommend careful planning in the establishment of a special needs trust.

Source: Reuters "Putting the special in special needs trusts" 3/4/2011