Jenny’s life was filled with joy, but it also had its challenges. Her son, Michael, was born with special needs, and she’d spent his entire life ensuring he had the best care and opportunities. When a friend mentioned “Special Needs Trusts,” Jenny realized she had no idea how to protect Michael financially after she was gone. That’s when she turned to Norton Estate Planning & Elder Law.
Special Needs Trusts (SNTs) are more than just legal documents—they’re lifelines for families like Jenny’s. These trusts allow parents or caregivers to set aside funds for a loved one with disabilities without jeopardizing their eligibility for crucial government benefits like Medicaid or Supplemental Security Income (SSI). The key? Funds in an SNT aren’t counted as the individual’s assets, so they can maintain access to these programs while also having supplemental funds for care, education, and enrichment.
But creating an SNT isn’t a simple DIY task. Federal and state laws dictate strict guidelines for how these trusts are established and managed. For example, the funds in the trust must be used only for the beneficiary’s needs—and not for expenses covered by public benefits. A misstep could disqualify someone from receiving Medicaid or SSI, leading to catastrophic consequences.
Now, consider the impact of beneficiary designations. Often, people assume they can simply name their loved one with special needs as a direct beneficiary of their life insurance or retirement accounts. But doing so could disqualify that person from government assistance. Instead, beneficiary designations should point to the SNT, ensuring that funds are channeled correctly.
Historical context shows why these tools are so critical. Before the establishment of SNTs in the 1970s, families had few options to protect their loved ones with disabilities. Parents often drained their savings to provide care or relied on informal agreements, which often fell apart. Jenny’s story has a happy ending because she sought the right help. By setting up a carefully crafted SNT and adjusting her beneficiary designations, she’s ensured Michael will always have the care he needs, even if she’s not there to provide it. Isn’t that the ultimate act of love? Request a Consultation today to learn how you can protect the people you care about most.
