If you don’t make any plans, whatever assets the special needs child has must be spent before Medicaid or any other government assistance program will step in to help pay for bills. The child will have no assets for extra comfort. The main reason for creating a special needs trust is to preserve the assets for the child so that the items and situations that Medicaid will not cover can be paid for out of that special needs trust.
Does The Type Of Disability A Child Has Determine The Type Of Planning That Should Be Done?
It does not matter what the disability is. The important thing is that he or she has been declared to be disabled by a competent physician or other person. Then, they are eligible for aid and you should create a special needs trust to protect their assets.
What Are The Legal And Financial Concerns That Must Be Considered For The Future Of A Special Needs Child, If The Proper Planning Is Not Done?
If proper planning does not take place, any assets that the special needs child owns must be paid down to under a minimum amount that is set by each state before government assistance programs will come in. If the child became disabled after he reached age 21, a power of attorney should have been created before the child became disabled. In some situations, of course, the child is disabled from birth and that would not apply.
Are There Different Types Of Special Needs Trusts?
There are two types of special needs trusts. The first is a first-party special needs trust. This is usually used when someone with special needs is injured in an accident and then gets a large settlement from the at-fault person or inherits a large sum of money. They will fund their special needs trust with that settlement or inheritance and protect their money that way. A third-party special needs trust is created and funded, usually, by a parent or family member for the special needs child. The third party’s money is funding that trust, rather than the disabled person’s own money.
Should Our Special Needs Trust Be Irrevocable? Why Or Why Not?
Every special needs trust has to be irrevocable; that is governed by state law.
How Do We Properly Fund A Special Needs Trust?
In a special needs trust, whoever creates the trust will need to also open a banking account with an EIN. Any funds that are paid into the special needs trust would be directed into that bank account, which is part of the trust.
My Child With A Special Needs Trust Has Just Passed Away. What Happens To The Money In That Trust?
When the special needs trust is set up, you will name a beneficiary for any money left in the trust after the death of the special needs’ child. However, when this child dies, Medicaid will file a claim against that trust and anything that Medicaid spent for that child must be paid back first. If there is still any money left, then that money would be paid to the beneficiary.
For more information on Special Needs Trust, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (864) 271-7940 today.