Utah's Premier Special Needs Planning Law Firm
"Special needs trusts" or "supplemental needs trusts" are terms used to describe any trust intended
to provide benefits without causing the beneficiary to lose public benefits he or she is entitled to receive.
Each special needs trust can be intended to protect different public benefits. Most commonly, special
needs trusts are intended to permit Supplemental Security Income (SSI), Medicaid and Section 8
housing recipients to receive some additional services or goods, thereby increasing the recipient's
quality of life.
The existence of a special needs trust does not itself make public benefits available; the beneficiary
must qualify for the benefits program already, or qualify after the trust is established. If properly
established, the special needs trust will not cause a loss of benefits, but the trust does not make
it easier to qualify.
Anyone can establish a special needs trust, but there are two general categories of such trusts:
self-settled and third-party trusts.
A third-party special needs trust can be established by one person for the benefit of another. The person establishing the trust, called the settlor (or grantor or, sometimes, trustor) chooses to make some of his or her own assets available for the benefit of the disabled beneficiary. Third-party special needs trusts are often established, for example, by parents for their developmentally disabled or mentally ill children.
Self-settled special needs trusts are often established by individuals who have received a personal injury settlement (perhaps, but not necessarily, arising out of the incident that caused the disability) or inheritance. More rarely individuals with pre-existing wealth determine that it would be advisable to create a special needs trust. Federal law makes it clear that a trust established with assets which would have belonged to an individual, or his or her conservatorship, is self-settled regardless of who signs the trust instrument.
Self-settled special needs trusts are much more complicated than their third-party equivalents. Usually (but not always), a self-settled special needs trust must be established by a judge, a court-appointed guardian or the parents or grandparents of the beneficiary. In addition most self-settled special needs trusts will have to include a provision repaying state Medicaid agencies for any benefits, payable at the death of the beneficiary. Such a provision is often called a "pay-back" provision.
Absent unusual circumstances, only self-settled special needs trusts require a provision repaying the state for Medicaid benefits. Third-party special needs trusts (those established by with one person's money for the benefit of a different person with a disability) do not ordinarily include any provision for repayment of government expenditures.
We have developed a unique process for our client families that want to create a Family Protection Plan for their child or other loved one with special needs—whether that individual is a minor or an adult. We understand that each family has different needs and resources. Therefore, we provide a variety of planning options.
UTAH SPECIAL NEEDS PLANNING ADVICE: CALL 801-463-2600
Why you should use Alder & Robb, P.C. for your special needs trust planning
Our mission is to ensure that every person with special needs is afforded the protection provided by a personalized and well-designed Special Needs Trust. In almost all planning situations, we prefer to draft what we call a stand-alone Special Needs Trust, rather than one that arises out of a will or a Revocable Living Trust, because a stand-alone Special Needs Trust can immediately receive gifts from multiple donors, such as grandparents or other relatives.
Our stand-alone Special Needs Trusts are carefully designed to ensure that the beneficiary has a support structure in place and designated loved ones or professionals to act as Trustee, advocate, care manager, or on an advisory committee. Distributions will be limited to provide for supplemental needs—including medical and dental care, various therapies, residential needs, social needs, education, and vocational training that public assistance programs may not provide. You may also include a statement regarding residential preferences and appoint a Trust Protector who will oversee the administration of the Trust.
When our client families are planning for a child with special needs, we provide a complete portfolio of supporting documents. In particular, we provide a Trustee Instruction Manual to make sure that your Trustee can successfully manage this special trust. We also provide a memo addressing tax issues, a sample Memorandum of Intent to provide your Trustee and guardian with loving instructions about the care of your child, and letters to family members and loved ones who might want to make a gift to the Trust.
Stand-alone Special Needs Trusts can be incorporated with either a will-based estate plan or a Revocable Living Trust-based estate plan. We strongly prefer to provide families with comprehensive Living Trust centered planning instead of will based planning because will based plans often result in unplanned outright distributions to beneficiaries.
On the other hand, a comprehensive Living Trust centered plan, with correctly titled assets, provides a greater degree of protection to a person with special needs. One of the benefits of working with our firm is that our Trust Funding Coordinator makes sure that all of your assets are correctly titled in the name of your trust and that your life insurance and retirement plan beneficiary designations are correct. Once this work is completed, you can rest assured that your beneficiary with special needs will never receive an inheritance that could inadvertently disqualify them from receiving essential governmental benefits.