If there is someone with special needs that relies on you, it is important that you understand that your estate plan will need particular consideration. For those that have a child or other relative that has special needs, you will need to become informed on Special Needs trusts.
In the case that someone is receiving federal assistance through Supplemental Security Income (SSI) due to being mentally or physically disabled, it is important that any inheritance that is left to them not disrupt these benefits or even worse, disqualify them.
For someone to qualify and continue to qualify for SSI, they cannot have more than $2,000 in non-exempt resources. If a disabled person receives an inheritance that exceeds their $2,000 limit, they will no longer qualify for federal assistance. Due to this limit on assets, one of the best ways to leave an inheritance to a special needs person is with a Special Needs trust.
Special Needs trusts are used to supplement living expense needs that exceed what is provided by the government through SSI. There are a few different types of trusts that are used for individuals with special needs – these include the first party trust, a pooled trust, or a third party trust. With all three of these trusts the person with special needs is named as the beneficiary.
With a first party trust, the assets belonging to the individual with special needs are held in trust. A third party trust will hold assets for someone such as a parent; these assets are meant to benefit the special needs individual. A pooled trust will hold assets for a number of individuals with special needs.
To create a trust for someone with special needs it is important to consult an experienced estate planning attorney. This trust will provide for the needs of the individual without jeopardizing their benefits, but it is important that it be structured in a way that will not disqualify that person from receiving available assistance.
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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