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Special Needs Trusts

Posted Dec 16 2010 7:23pm

In the United States, adults with disabilities can receive support through social security . But, if you have over $2,000 in assets, you don’t qualify. This leaves parents of disabled children in a bit of a quandary: how do you provide for your children after you are gone? From Lawyer.com :

In order to qualify for the Social Security Administration’s Supplemental Security Income Benefits, (“SSI”), a disabled adult can’t hold more than $2,000 in assets, excluding a car and a home. SSI benefits, which average about $400 per month, must be spent on food, clothing and shelter expenses.

Eligibility for SSI makes a disabled person eligible for food stamps and Medicaid, which pays medical expenses, nursing home care and mental health services. Medicaid eligibility also makes a disabled person eligible for many local community services, as well.

As these benefits add greatly to a disabled person’s ability to care for him or herself, you wouldn’t want to give your disabled child property that would disqualify him or her from receiving these benefits.

One way to plan for the future is with a “special needs trust” also known as a “supplemental needs trust”. This is a trust fund to supply those needs beyond those which Social Security might provide. One doesn’t have to put money into the trust right away, but can leave money to the trust on death.

The whole process of wills, trusts, supplemental needs trusts and so on can be pretty daunting, both legally and financially. Getting a lawyer to set these up can cost a few thousand dollars. It can be money well spent, and it can be more money than you might be able to afford right now. One excellent source of do-it-yourself legal advice is Nolo press. Nolo has a book on supplemental needs trusts: Special Needs Trusts/Protect Your Child’s Financial Future . I haven’t read this one yet, but I have found other books by Nolo to be well worth the money (this one is under $30).

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  2. farmwifetwo:
    In Ont it's $5000 and the rest must be in a Henson Trust http://en.wikipedia.org/wiki/Henson_trust Until such time the Ont gov't legislates around it and our kids are screwed over. It is not recommended that the trust be in place until 18 due to the fact that until then it's taxed at the highest income level and I was told about $1,500 to do. So, the will is set up to activate a trust if we both die - with trustees - otherwise we are waiting until then. This much cost us about half of the trust amount for both of our wills etc. But, you need to get a lawyer to make certain it's worded just the right way.
  3. Liz Ditz:
    Also see the post at The Thinking Person's Guide to Autism, http://thinkingautismguide.blogspot.com/2010/08/when-youre-gone-practical-planning-for.html Excerpt: The following summary is based on a 2010 SEPTAR.org presentation on Financial Planning and Your Child's Future. While the following information is critical, it is not official advice but rather a primer on how to get started and what to look for. Once you're ready to take action, you should consult with professional special needs financial planners, and lawyers who specialize in special needs trusts. What is a Life Care Plan? Life care plan: takes into consideration the life, needs, and goals of people with special needs. Its about taking care of an individual with a disability after their parents are gone, and ensuring quality of life for that individual and their remaining family in all areas of life. The goal is to create a flexible roadmap for the person in question's life: If any new therapies, medications, government benefits, etc. emerge, the plan needs to be able to adapt.

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