Understanding Special Needs Trusts
Unlocking the Benefits of Special Needs Trusts in Estate PlanningA special needs trust, also known as a supplemental needs trust, plays a pivotal role in estate planning, particularly when you have a family member with a disability. Discover why considering a special needs trust is crucial for securing your loved one's future and financial stability.
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Why Consider a Special Needs Trust
Special needs trusts serve three significant purposes:
- Preserving Government Benefits: Government benefits like Supplemental Security Income (SSI) are essential for disabled individuals but often come with income and asset limitations. A special needs trust, as an irrevocable trust, allows you to provide financial support without jeopardizing their eligibility for such crucial programs.
- Tailoring to Unique Needs: Individuals with disabilities often have unique requirements that a standard bequest cannot address. A special needs trust can be customized to manage trust assets in a way that caters to these specific needs.
- Protecting Assets from Creditors and Ex-Spouses: Concerns about creditors or ex-spouses gaining access to assets, especially in cases involving mental disabilities, can be alleviated through a special needs trust. This trust ensures that the assets remain intact and secure for the benefit of your family member.
Types of Special Needs Trusts
There are two primary types of special needs trusts:
- Third Party Special Needs Trust: As a third party, you can contribute assets to this trust for the beneficiary's benefit. When set up correctly, it won't impact their eligibility for government benefits. You can also specify the distribution of assets after the beneficiary's passing, ensuring your wishes are carried out.
- First Party Special Needs Trust: These trusts are established when a disabled individual receives a substantial sum from an external source, such as a personal injury settlement, employment discrimination lawsuit, or lottery winnings. While functioning similarly to third party trusts during the beneficiary's lifetime, they may be subject to government claims on trust assets after the beneficiary's passing if they were receiving government benefits.
Funding a Special Needs Trust
A special needs trust serves as a container for holding assets, and you can fund it when creating the trust or at any point thereafter, including through your will.
- If your primary concern is ensuring your child's well-being after your passing, you can establish the trust and direct assets to it within your will. This approach offers flexibility with your assets during your lifetime while securing your child's future.
- If your adult child is living independently or semi-independently, consider placing assets into the trust early on. Activating the trust while you're alive allows your child and the trustee to become familiar with its workings, providing additional peace of mind for your planning.
Meet Our Estate Planning Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna wrote a book on estate planning: The Road to Peace of Mind: What You Need to Know About Estate Planning. Jenna has helped many individuals and families with planning to protect their legacies and loved ones, and planning for the future and succession of their businesses.
Sharleen Tinnin: Sharleen is a 2010 graduate of Northeastern University School of Law, and earned her LLM in estate planning from Western New England Scool of Law in 2016. She has been with slnlaw since 2023. Prior to joining slnlaw, she worked with King, Tilden, McEttrick & Brink, P.C. on complex civil litigation matters. She previously worked for the United States Department of Justice, and received an "Excellence in Justice" award in 2017. Sharleen has helped many clients with planning for their legacies and their future, and navigating the probate process in Massachusetts after the death of a loved one.
How We Can Help
Our team is dedicated to assisting you in creating a comprehensive estate plan that addresses all your family's needs. We understand that starting this process can be challenging, and we strive to make it as seamless as possible. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322 for personalized guidance on securing your family's financial future.
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