The short answer to this question is a resounding Yes! Special Needs Trusts are not just for individuals who cannot take care of themselves. From my perspective, they are also a wonderful vehicle to assist individuals who are completely independent adults, who are experiencing some type of disability or condition that limits their full autonomy or decision making capabilities, who may be eligible now or in the future to receive government benefits, who will always need a little assistance in managing things.
A Special Needs Trust aka Supplemental Needs Trust is a Special Type of Container (let’s call it a Treasure Chest) that allows another to become the Permanent Trustee/Fiduciary/Key holder to the Treasure Chest – to manage all the Supplemental Needs of the individual who is the beneficiary of the Trust. This way that person can always be eligible for benefits regardless of any amount of money they inherit, and they will always have someone to help them with money management and other tasks that may be beyond their ordinary capacities (even if they are fully independent).
So without further ado let me provide some examples of how this works and why these Supplemental Needs Treasure Chests (i.e. Special Needs Trusts) for independent high functioning adults are so great.
Story Of An Elderly Man With A Special Needs Son In His 40s
It warms my heart every time a family finds me and reaches out with this scenario because we are able to use the law of estate planning to build such a beautiful Treasure Chest of protection for my client’s children and grandchildren. Just the other day an elderly gentleman, retired, who currently lives with his son (who is in his 40s), reached out to create an estate plan in a way that protects his son and ensures his daughter doesn’t have to “manage everything” for the son for the rest of her life. This man’s son is very independent but experiences a couple different diagnoses of what would be considered a life long mental illness requiring medication, and is sometimes challenged with the day-to-day and money management causes him too much stress for his conditions. The man has significant life insurance and other accounts he wants to leave to his son to make sure that he is taken care of for the rest of his life. But his one question – was how do I leave this to my son without making him ineligible for benefits that he may need in the future? He can work certain types of jobs but he is never going to be fully independent especially in such an expensive region as the Pacific Northwest.
This is exactly the situation where a Special Needs Trust can be the hero. I explained that a Special Needs Trust can be set up to receive the life insurance proceeds and the brokerage account after the gentleman’s death – and then a professional fiduciary can manage the trust on behalf of the son, or the daughter can with the help of a professional team of support. This way the son doesn’t have to become a burden to his sister (i.e. moving in with the sister, or the sister having to take the accounts in her name and dole things out to her brother). The son could remain completely independent, he will just work with the professionals to help ensure that the life insurance and brokerage funds support him throughout the rest of his life to pay rent and other necessities.
Story Of An Elderly Woman Living With Her Special Needs Daughter In Her Late 40s
Another story with a happy ending – this time thanks to a referral. A lovely pair of clients who did their estate planning with me moved next door to a woman who is older like them, and they got to talking about her concerns about her adult daughter (late 40s) with rheumatoid arthritis – so they sent her to me because they knew I could help her. Her daughter currently receives government benefits to pay her rent because her condition is so debilitating she can only work a little bit, but as a result she cannot have over $1800 in assets in her name at any given moment.
The woman wanted to leave her daughter her house, and her retirement savings so she would have something to take care of her for the rest of her life–but she didn’t know how this was possible because of the asset limitations. When I talked with her she was ecstatic to find out that a Special Needs Trust for her daughter could solve all of these issues. The Special Needs Trust can take title to the home and the proceeds of the retirement account (that we moved to a safe annuity to ensure no market loss as such a vital resource to both of them) and because the trust would own the assets after her death, the daughter can continue to receive benefits but have the home and the retirement savings to support her. And in her case we identified an appropriate individual to be the Trustee of the Special Needs Trust upon the woman’s death, with my firm being the back-up in case that person wasn’t available. It lifted such weight off the woman’s shoulders that when she left me a raving Google Review the search giant didn’t believe the review she wrote me is real so they have yet to publish it!
Story Of Another Woman With A Special Needs Son In Another State
I have one more example – another woman called me the other day and she had set up an ABLE account for her special needs son with a permanent disability, who is 41 and lives in Oregon. She was concerned that she was going to have to disinherit her son because his benefits in that state are income contingent and her estate has a sizable amount of equity with real estate proceeds. She was wondering if she has to fund his ABLE account while she’s alive and then just give the rest to his sisters. She was also worried, because of his type of condition and benefits that any money not used in his account would then have to go to the government after his death. People can gift him up to $19,000 a year with an ABLE account. (More on ABLE accounts in Washington here)
This is where the Special Needs trust i.e. the Treasure Chest could save the day again. I said we absolutely DO NOT need to disinherit her son. She can, in her estate plan, create a Special Needs Trust for her son, and appoint her daughter (his sister) who lives nearby to be the trustee. This way she can leave whatever percentage of her estate to the son, and it will go in the Trust and not affect his benefits at all. Moreover, after his death the money in that 3rd party special needs trust will not go to the government – it will go to his heirs or be distributed to his sisters. She was so happy to learn that the trust will be there for her son’s supplemental needs forever, and after he son dies the money would not go to the government to pay back those benefits like other types of accounts and trusts she read about.
The Miracles of Special Needs Trusts Can Help You Too
These are just three examples of the miracles a special needs trust, set up in a comprehensive estate plan, can do for families. Just because your child is no longer a child, and is highly functional as an adult in this world, does not mean that the Treasure Chest of protection provided by a Supplemental Needs Trust/Special Needs Trust is not available to your child or your family. There is not a medical qualification or diagnosis qualification, further, a beneficiary of these trusts does not even have to be receiving government benefits! All you need to do is contact a qualified estate planning attorney like myself who does comprehensive planning who assists families in setting up Third Party Special Needs trusts.
Great News is you do not have to search for this attorney – it is part of my firm’s mission to help families with this very important situation and to create estate plans that take care of children of all ages and abilities who can benefit from Special Needs Estate Planning. All you need to do to get started is book a call by clicking the button below and we will get you on the road to ensuring your adult children’s futures today.