A special needs trust has four chief purposes:

  1. to preserve eligibility for government services;
  2. enhance quality of life;
  3. protect a vulnerable beneficiary; and,
  4. avoid government recoupment.

Many families planning for the future of a child or grandchild with disabilities establish a Special Needs Trust. A trust is needed so that money can be available to the person with a disability while at the same time, preserving government benefits.

Occasionally a client will ask us to review a special needs trust prepared by another law firm. Unfortunately, many of these documents either fail to conform to the legal requirements for a special needs trust or fail to anticipate future changes in benefit delivery systems and therefore limit the trustee’s ability to meet the changing needs of the disabled individual.

Poorly written trusts can actually jeopardize the individual’s eligibility for government benefits, and may lack the ability to protect and enhance the beneficiary’s life.

When we develop – or review – a Special Needs trust, we look to ensure that it not only has the ability to preserve eligibility for benefits but also demonstrates awareness of the service delivery system and trends for the future.

For example, a well-written Special Needs Trust will preserve eligibility for services while still allowing for the purchase of private services if public programs are not of suitable quality. An overly restrictive Trust might be unavailable to pay for an addition to the home of a sibling in which the beneficiary might someday reside, or to pay for a sibling’s travel to visit the beneficiary.

With the advent of self-directed services we are on the cusp of a revolution in the delivery of services. New models might involve the contribution of an interest in real estate or the transfer of other valuable resources up front to secure services of choice. Poorly worded trusts could hamper participation in such programs.

Government benefits and the service delivery system are dynamic and a trust might not be flexible enough to be compatible with the system years from now. A focus on preserving eligibility rarely takes this into account.

These progressive provisions enhance the value of the trust for an individual with a disability. It is vital that a trust be written to comply with governing law and yet be flexible enough to meet the future needs of the beneficiary.

As with all estate planning documents, special needs trusts should be reviewed every five to ten years, or when family circumstances change.

Published on Oct 16th, 2012. © Copyright 2012 Hinkle, Fingles & Prior, P.C., Attorneys at Law. All rights reserved.
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