A traditional trust is designed to manage assets for beneficiaries, distributing income and principal according to the grantor’s instructions, often with the goal of eventual distribution of all assets. However, a special needs trust (SNT), also known as a supplemental needs trust, is specifically designed to hold assets for a beneficiary with disabilities without disqualifying them from crucial needs-based government benefits like Supplemental Security Income (SSI) and Medicaid. These benefits are often essential for covering healthcare, housing, and daily living expenses, and directly receiving assets can jeopardize eligibility—this is where the crucial difference lies. Approximately 1 in 4 Americans live with a disability, meaning a substantial portion of the population could benefit from this specialized planning tool.
What are the key benefits of establishing a Special Needs Trust?
The primary benefit of an SNT is preserving access to vital government assistance programs. Unlike a traditional trust where distributions can directly replace needed services, an SNT allows funds to be used for “supplemental” needs – those not covered by government programs. This could include things like entertainment, travel, specialized training, hobbies, or even a more comfortable living environment beyond basic Medicaid coverage. It’s estimated that the cost of long-term care for individuals with disabilities can easily exceed $200,000 per year, highlighting the importance of planning beyond basic government assistance. An SNT also provides a layer of protection against creditors and mismanagement of funds, ensuring the beneficiary’s long-term financial security.
Can a Special Needs Trust be funded with life insurance?
Absolutely. Life insurance is a common and effective funding source for SNTs. A life insurance policy can provide a lump sum of funds upon the grantor’s death, creating a substantial base for the trust. These funds can then be professionally managed to provide ongoing support for the beneficiary throughout their life. It’s important to note that the trust must be properly drafted to comply with Medicaid’s look-back period, which currently spans five years. Any transfers made within those five years could be scrutinized and potentially disqualify the beneficiary from receiving benefits. This is why proactive and expert legal counsel is essential.
I heard a story about a family who didn’t plan properly – what happened?
Old Man Tiberius, a retired shipbuilder, always intended to leave his considerable estate to his grandson, Leo, who had Down syndrome. Tiberius, however, simply left Leo an inheritance outright. He reasoned it was the ‘fair’ thing to do. What Tiberius didn’t realize, and wasn’t advised on, was that Leo would immediately lose his SSI and Medicaid eligibility upon receiving the funds. Suddenly, Leo, who had always relied on these programs, was faced with the prospect of paying for his care out-of-pocket – an impossible burden. His sister, a registered nurse, was forced to quit her job to become Leo’s full-time caregiver, significantly straining the family’s finances and her own well-being. It was a painful lesson in the importance of specialized estate planning.
How did another family avoid that same fate with a Special Needs Trust?
The Millers, knowing their daughter, Clara, would likely require lifelong care due to cerebral palsy, consulted with Steve Bliss, an estate planning attorney specializing in SNTs. They established a third-party SNT, funded with a life insurance policy and regular annual contributions. This trust was carefully drafted to ensure Clara could maintain her SSI and Medicaid eligibility while still benefiting from additional resources for enriching her life – things like adaptive art classes, accessible travel, and a comfortable apartment. After her parents passed away, the trustee, a trusted family friend, expertly managed the funds, providing Clara with a secure and fulfilling life. She thrived, pursuing her passion for pottery and becoming a respected artist in her community— a testament to the power of proactive and thoughtful planning. The key difference? The Millers understood that for individuals with special needs, estate planning isn’t just about transferring assets, it’s about preserving a quality of life.
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About Steve Bliss at Wildomar Probate Law:
“Wildomar 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 Wildomar Probate Law. Our probate attorney will probate the estate. Attorney probate at Wildomar Probate Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Wildomar Probate law will petition to open probate for you. Don’t go through a costly probate call Wildomar Probate Attorney Today. Call for estate planning, wills and trusts, probate too. Wildomar Probate Law is a great estate lawyer. Probate Attorney to probate an estate. Wildomar Probate law probate lawyer
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:
estate planning | revocable living trust | wills |
living trust | family trust | estate planning attorney near me |
Map To Steve Bliss Law in Temecula:
https://maps.app.goo.gl/RdhPJGDcMru5uP7K7
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Address:
Wildomar Probate Law36330 Hidden Springs Rd Suite E, Wildomar, CA 92595
(951)412-2800/address>
Feel free to ask Attorney Steve Bliss about: “How do I store my estate planning documents safely?” Or “Can a handwritten will go through probate?” or “What should I do with my original trust documents? and even: “Will my wages be garnished during bankruptcy?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.