Absolutely, a special needs trust can indeed pay for estate planning services for the beneficiary’s future, but it requires careful consideration and adherence to specific guidelines to avoid jeopardizing public benefits like Supplemental Security Income (SSI) and Medicaid.
What are the limitations on using trust funds?
Typically, special needs trusts are designed to supplement, not supplant, government benefits. This means the trust can pay for goods and services that enhance the beneficiary’s quality of life *without* affecting their eligibility for needs-based assistance. However, there’s a distinction. Direct payments for things like medical care, therapies, recreation, and personal care are generally permissible. But, pre-funding something that *could* be covered by government programs – or services that aren’t directly for the beneficiary’s immediate benefit – can create problems. For instance, a trust generally cannot directly pay for a beneficiary’s legal fees associated with *creating* their own estate plan, as that’s considered a disqualifying disposition of assets. As of 2023, approximately 12.6% of Americans have some form of disability, making careful planning even more crucial.
How does this apply to future estate planning for the beneficiary?
The key is *how* the estate planning services are structured. A trust can pay for legal counsel to advise the beneficiary on issues *related* to their current situation and ongoing care, like navigating benefits systems, understanding guardianship, or addressing specific healthcare decisions. It can *also* pay for legal services to address issues that arise *during* the beneficiary’s lifetime. However, funding a future will or trust for the beneficiary *from* the special needs trust is problematic. It’s seen as the beneficiary having assets, potentially disqualifying them from crucial programs. Think of it this way: the trust can pay for someone to *advise* on estate planning, but not to *create* an estate plan that the beneficiary would own. “Properly structured trusts are vital; an estimated 60% of individuals with disabilities rely on trust funds for long-term care,” according to a recent study by the National Disability Rights Network.
What happened with the Miller family?
I remember the Miller family vividly. They had a son, David, with cerebral palsy, and a carefully constructed special needs trust. Years after establishing the trust, they decided David needed his own estate plan – a simple will directing where his personal belongings would go after *his* passing. They began using trust funds directly to pay a lawyer to draft this will. Unfortunately, this triggered a review of David’s Medicaid eligibility. The state determined that the funds used for the will constituted a disqualifying asset because it was essentially gifting him an asset, even if it was a legal document. It took months, and considerable legal fees, to demonstrate that the intent was to simply provide for David’s future, not to disqualify him from benefits. The family felt incredibly stressed and almost lost David’s coverage.
How did the Johnson family navigate this successfully?
The Johnson family, facing a similar situation with their daughter, Emily, took a different approach. They engaged an attorney to provide ongoing consultation to Emily regarding her future wishes, especially concerning her care and guardianship. The trust paid for these consultations, focusing on advising Emily about making informed decisions. They then used the trust to pay for Emily to participate in supported decision-making training, empowering her to express her desires. When it came time to document those wishes, they worked with the attorney to create a “letter of intent” – a non-binding document outlining Emily’s preferences. This document wasn’t a legally binding estate plan *owned* by Emily, but rather a guide for her future guardian. It preserved Emily’s benefits while ensuring her wishes were known and respected. It was a perfect example of proactive planning, and the peace of mind it brought them was immeasurable. “The biggest mistake people make is waiting until a crisis occurs. Advance planning with a special needs trust can prevent so much heartache,” I often tell my clients.
Remember, careful planning and expert legal counsel are crucial when dealing with special needs trusts. Don’t hesitate to seek guidance to ensure your loved one’s future is secure.
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About Steve Bliss at Escondido Probate Law:
Escondido Probate Law is an experienced probate attorney. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Escondido Probate Law. Our probate attorney will probate the estate. Attorney probate at Escondido Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Escondido Probate law will petition to open probate for you. Don’t go through a costly probate call Escondido Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Escondido Probate Law is a great estate lawyer. Affordable Legal Services.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
- living trust
- revocable living trust
- irrevocable trust
- family trust
- wills and trusts
- wills
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Map To Steve Bliss Law in Temecula:
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Address:
Escondido Probate Law720 N Broadway #107, Escondido, CA 92025
(760)884-4044
Feel free to ask Attorney Steve Bliss about: “Can life insurance be part of my estate plan?” Or “How do debts and taxes get paid during probate?” or “What are the main benefits of having a living trust? and even: “How does bankruptcy affect my credit score?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.