A Special Needs Trust is an Irrevocable Trust used to manage the funds of a family member with a mental or physical disability. If you have a loved one with a disability who relies upon you for financial help, you can use such a Trust to assure there are funds available for that family member’s care. This type of Trust may be unnecessary if your loved one can manage his or her own finances and does not need government aid. So, when is the best time to use a Special Needs Trust?
Underage Recipient
If your disabled loved one is a minor child, an Irrevocable Trust can provide funds for his or her care throughout childhood. This will ensure your child has proper medical and physical care.
Recipient Unable to Work
If your family member’s disability keeps him or her from working, you can use a Special Needs Trust to provide long term income for that individual. If funds are substantial, your Trust can even be a Lifetime Trust to cover your family member’s extra medical needs in his or her elderly years.
Cannot Manage Funds
If your special needs person cannot manage his or her own funds, a Trust allows you to appoint a reliable family member, friend or a bank’s trust department to act as Trustee and disburse funds as needed for your beneficiary’s regular and special needs.
Government Aid
Many people with disabilities that keep them from holding a job are eligible to receive Supplement Security income, Medicaid and housing assistance. If you leave a direct inheritance to such an individual, you will jeopardize his or her aid. A direct inheritance will be seen as income and government aid will be adjusted to reflect those funds.
A Special Needs Trust, however, includes provisions that allow for disbursement of funds without disqualifying your special needs person from receiving aid. In this fashion, the Trust will last longer, and supplement the aid funds with a little extra money for your loved one.
Larry Parman
Attorney at Law
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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