Offices in Hyannis, Easton & New Bedford
Estate planning is important for everyone, but it is particularly important for parents of children with special needs. Planning for a loved one with special needs includes protecting government benefits and ensuring that your loved one has enough resources to live comfortably for the rest of his or her life. If you are caring for a child or young adult with a disability, you likely have concerns about their future when you are no longer able to provide for them.
Surprenant & Beneski, P.C. works with families in Southeastern Massachusetts, Cape Cod, and the Islands to help them provide for loved ones with special needs. By establishing a special needs trust, you can preserve your loved one’s eligibility for public benefits while enhancing their well-being. When you consult our estate planning attorneys, you will have peace of mind knowing that your loved one will continue to be well-cared for when you can no longer do so.
We Are Part of the Special Needs Alliance
Managing Partner, Attorney Daniel Suprenant is a Member of the Special Needs Alliance, a national alliance of attorneys for special needs planning. The Special Needs Alliance is invitation-only and only extends invitations to highly qualified, ethical attorneys. Members of the Special Needs Alliance must have years of experience practicing in special needs law, and they must show a dedication to the study of this complex area of law. Only attorneys with a lengthy track record of practicing in the area of special needs law who have high ethical standards can become members of the Special Needs Alliance.
Members must actively participate in committees and attend continuing education in the area of special needs law. Only those attorneys with experience in the disability and elder law, who have direct experience with disability, and who are actively involved in disability advocacy receive invitations to become members. Attorney Suprenant is proud to be a part of the Special Needs Alliance. As a managing partner, he uses his experience and dedication to special needs estate planning to offer clients the skilled legal representation they deserve.
The Goals of Special Needs Planning
The main goal of special needs estate planning is to protect the public benefits for a disabled person while supplementing their benefits to give them the best possible quality of life. At Surprenant & Beneski, PC, we help families ensure that their estate plan provides a lifetime of money management that benefits the person with special needs. Our legal team also works to ensure that the individual’s public benefits remain protected. Finally, we often set up a special needs trust to make sure that a pool of funds remains available for future use, should your loved one’s public benefits ever become restricted or stop altogether.
Protecting Government Benefits
Individuals with special needs often receive public benefits such as Social Security disability benefits and Medicaid (MassHealth); however, receiving an inheritance could jeopardize their benefit status. Government benefits provide financial support and essential services for adults and children with disabilities.
When a child with special needs applies for public benefits, the parents’ assets are typically not considered. However, when the child becomes an adult, his or her assets could bar eligibility for public benefits. If your child turns 18 and applies for benefits, they could be denied if they own too many assets. The following public benefits programs have strict standards when it comes to financial eligibility:
- MassHealth/Medicaid Benefits
- Supplemental Security Income (SSI), which provides money for food and shelter
- Food stamp benefits
- Housing subsidies
Personal injury settlements, gifts, inheritances, and monthly allowances can disqualify an adult with special needs from qualifying from these important benefit programs. One of the best ways to make sure that your adult child with special needs continues to receive these benefits is to create a special needs trust.
Special Needs Estate Planning Options
When a special needs adult is receiving needs-based public benefits, families have a few options for making an estate plan. Some families consider disinheriting the child, which would allow the child to qualify for benefits but would not provide them with the supplemental income they need. Parents sometimes choose to give the estate to the siblings of the individual with special needs.
The approach can be problematic, the siblings may be subject to creditors or go through a divorce or bankruptcy, leaving no money for their child with special needs. Parents also consider leaving a traditional inheritance to their special needs child through a will. However, doing so puts their public benefits at risk. For most families, creating a special needs trust is the best option for estate planning. Your special needs child will be able to stay eligible for public benefits. At the same time, the income and principal from the trust will pay to enrich your child’s life.
Creating a Special Needs Trust
Special needs trusts are designed to hold assets for an individual with a mental or physical disability or a chronic illness. Any assets and property that you transfer into the special needs trust will not count against your loved one to obtain public benefits. Parents and loved ones of individuals with special needs can place a wide variety of assets into a special needs trust, including a home and motor vehicle. The special needs trust agreement must state that the assets are not intended to provide basic support, but will only be used for legally permissible supplemental benefits and services, such as:
- Educational and recreational activities
- Personal care attendants
- Out-of-pocket medical and dental expenses
- Physical rehabilitation
- Medications that are not covered by medical benefits
- Special dietary needs
Types of Special Needs Trusts
Properly structured special needs trusts are typically irrevocable, meaning they cannot be modified or revoked during the grantor’s lifetime, the person who created the trust. If you are concerned with income tax considerations, and if more than a million dollars will be going into the trust, you will likely need to create an irrevocable trust.
The most common type of special needs trust is a third-party trust in which the beneficiary does not own the assets, but another person, typically a parent. The designated trustee is tasked with managing the assets and carrying out the terms of the trust, which is why this individual must be reliable and capable. It is important to note that a trustee is considered a fiduciary and can be held liable for any mistakes or misconduct.
Another type of special needs trust is a first-party trust. This form of SNT is typically established when a disabled individual receives money through a legal settlement, retirement funds, life insurance proceeds, or an inheritance. The trust will hold these assets to preserve the special needs person’s eligibility for benefits.
Transferring a Home and Vehicle into a Special Needs Trust
Many of our clients would like their child with special needs to continue living in their homes. Parents have the option of transferring ownership of their home into the special needs trust. Transferring a primary residence into a special needs trust will not disqualify the individual from receiving public benefits such as Supplemental Security Income (SSI). However, there is a limit to the home’s property value when the beneficiary only receives Medicaid/MassHealth. Additionally, the beneficiary of a special needs trust is allowed to own one motor vehicle of any value while still qualifying for SSI benefits.
Transferring Personal Property Into a special needs trust
As the parent of a child with special needs, you can also transfer personal effects into the special needs trust. The definition of personal effects is unlimited, and any property that your child keeps in the home will not be counted as an asset when it comes to eligibility for public benefits. For many individuals with special needs, a smooth transition will be incredibly important. If you pass away, your child’s ability to remain in his or her home with his or her home furnishings and personal effects will help them through the transition period.
Property Essential for Self-Support
You can also transfer property essential for self-support into the trust, which includes any proper use for business or trade. This category also includes any property your child is required to have as an employee, such as tools, inventory, or other equipment used during his or her employment. Property essential for self-support also includes up to $6,000 of non-business property used to produce services or goods that are essential to your loved one’s day-to-day activity. It also includes up to $6,000 of non-business income-producing property that yields an annual return rate of at least 6 percent.
Assets to Attain an Occupational Goal and Insurance Policies
Individuals with disabilities who receive SSI benefits can also use certain assets that assist with attaining an occupational goal. For example, the special needs trust can hold assets to be used for vocational training, starting a business, or paying for college. Special needs trusts can also hold life insurance policies with a cash surrender value of less than $1,500 and burial insurance policies of any value.
Selecting a Trustee
As the grantor or creator of the special needs trust, you can select the trustee(s). Trustees are responsible for the administration of the special needs trust. They will owe a duty to your special needs child, the beneficiary, to manage the trust for his or her benefit. The trustees must recognize that the special needs trust is for the benefit of your child with special needs, and the importance of helping your child remain eligible for public benefits.
Special needs trustees need to be willing to make a long-term commitment to managing the trust. They should also be willing to actively monitor the trust, act as a prudent investor, and keep your child’s best interest at the forefront of all trust management decisions. In many cases, we recommend choosing an independent, non-family member to act as your trustee. If you select a trust company or non-profit, try to find one with special needs experience. If you are unsure of who to appoint as your trustee, we can help advise you. Parents of special needs children should consider the following options for trustees:
- A parent, sibling, or other relative
- A financial institution or trust company
- A non-profit organization
- Co-trustees, such as a trust company working together with a family member
Selecting a Care Manager for Your Child
When creating a special needs trust, parents can require the trust to hire a care manager upon their death. The care manager will specialize in providing your child with the level of care he or she needs. Care managers should be knowledgeable of the public benefits your child receives, as well as his or her health conditions and emotional needs. Good care managers are responsible for doing the following:
- Ensuring that your child’s physical needs are met
- Monitoring your child’s progress
- Coordinating cleanliness and nutrition programs
- Making sure your child’s physical therapy and exercise routines are maintained
- Coordinating any needed psychological counseling and social activities
- Ensuring your child has all of the assistive devices he or she needs
- Create and maintain emergency plans to resolve any potential emergency quickly
- Coordinate your child’s doctor’s appointments
Creating a Letter of Intent
Many parents with a special needs child include a letter of intent in their estate plan. While letters of intent are not legally binding, they provide parents with an opportunity to share about their child’s unique background and life. When parents write a letter of intent, they help their child’s caretakers understand his or her preferences, medical history, unique personality traits, favorite foods, and activities. Parents can also write down their family’s specific goals, wishes, and expectations.
Who qualifies for a special needs trust in Massachusetts?
To qualify for a special needs trust in Massachusetts, the individual must:
- Be a resident of Massachusetts
- Be under the age of 65
- Have a disability that is expected to last for at least 12 months
- Be receiving or eligible to receive government benefits, such as SSI or Medicaid
If you meet these criteria, you may be able to establish a special needs trust to help protect your assets and ensure that you have access to the care and support you need.
What are the disadvantages of a special needs trust?
The disadvantages of a special needs trust in Massachusetts include:
- Cost: Special needs trusts can be expensive to set up and maintain.
- Complexity: Special needs trusts are complex legal documents, and it is important to have an experienced attorney draft and administer the trust.
- Lack of control: The trustee of the special needs trust has control over how the funds are used, and the beneficiary has limited input.
- Medicaid payback: Upon the beneficiary’s death, the trust may be required to repay Medicaid for the amount of benefits the beneficiary received.
If you are considering setting up a special needs trust for a loved one, it is important to weigh the pros and cons carefully. You should also consult with an experienced attorney to discuss your specific situation.
Contact Our Southeastern Massachusetts Special Needs Planning Attorneys
At Surprenant & Beneski, P.C., we are keenly aware that planning for a loved one with special needs can be challenging. Our legal team will provide you with informed representation and caring personal service. We will take the time to get to know you and understand the challenges facing your loved one.
Our legal team is well-versed in the rules governing special needs trusts and the qualifications for obtaining a wide variety of public benefits. We can establish a special needs trust as part of your comprehensive estate planning strategy. Additionally, we will work with you to ensure that the special needs trust is funded, which entails properly transferring property into the trust. Above all, we are committed to protecting your interests and the welfare of your loved one. Please contact our office today to schedule a consultation with our estate planning attorneys.