Legal Requirements to Set Up a Special Needs Trust
A special needs trust is also referred to as Supplemental Needs Trust. This is a trust especially set up for people with disabilities that is over and above the government benefits such as Social Security and Medicaid. A special needs trust usually uses a trustee to manage the money.
The law actually does not allow a person with disability to have a trust but a special needs trust/supplemental needs trust does not belong to the person with a disability. The trust is established and administered by someone else, the trustee, and the person with disability is nominated as a beneficiary. The trustee is, thus, given the right to determine when and how much the person with special needs should receive.
Supplemental Security Income and Special Needs Trust
As stated, you can still qualify for Social Security Administration’s Supplemental Security Income Benefits or SSI if the your assets are worth less than $2,000, excluding a car and a home. SSI benefits are meant to be spent on food, clothing and shelter expenses which total $400 per month. There are food stamps and Medicaid.
Funding Options
A special needs trust may be funded through first-party and third-party. The first party funded SNT is funded directly by the person with a disability. If a disabled person won a large court judgment against someone, they would establish a first-party SNT using the money that the defendant will pay.
A third party, on the other hand, uses someone else’s money with the person with disability as a beneficiary. Parents, can establish one for their child.
Where Can You Use SNT
Given that the government is already providing for the basic needs of persons with disabilities, where will the money from SNT may be used?
It can be used for special items such as a vehicle, a computer, furniture, laundry, audio equipment, electronic devices, medical care not covered by Medi-Cal, etc. The law also recognizes that the medical needs of someone with disability may grow. Eventually, special care may be needed, the fund may be used for that.
Who Can Be a Trustee
There really is no strict rule on who can serve as the trustee but the responsibilities of the trustee should serve as a guideline on who to select. For example, the trustee will have the right to decide how much of the fund will be released and when. If the trustee is someone who has the tendency to put his needs first above the one with the special need, then the fund might be used for personal purpose. The trustee will also have the obligation to be updated with the law so it has to be someone who has the capacity and initiative to research the changes in the law that might affect the SNT.
Related posts:
- What is Settlement Preservation Trust?
- Structured Settlements with Special Needs Trust
- Legal Considerations in Selling Structured Settlements of Children
- US Treasury Bond Structured Settlement
- Why Use Structured Settlement For Employee Medical Benefits
