Special Needs Trusts

Special Needs Trusts

We have received many questions about special needs trusts, so we’ve put together some of the questions and answers to help you.

What are special needs trusts?

A trust is created when property (real estate, finances, tangible items) is managed by a person for another person’s benefit. The person managing the property is called the “trustee.” The person whose benefit it is for is called the “beneficiary”. The trust lasts as long as it is needed. This usually means the trust will go on until the beneficiary’s death or until the funds are expunged.

Special needs trusts are made specifically for the benefit of those with physical and/or mental disabilities, including those with mental disabilities who lack the capacity to manage their own finances. The trust is created with the specific needs, lifestyle, and future of the beneficiary in mind. Often times these special needs trusts are used to ensure that the beneficiaries don’t lose government benefits they are receiving. The trustees of special needs trusts can be family members or, if an appropriate and trustworthy family member is unavailable, a third party will be appointed by the court. Choosing the right trustee must be done very carefully, especially for special needs trusts that are used for the benefit of a younger person.

What are the benefits of special needs trusts?

Often times, people with disabilities qualify for government assistance such as Supplemental Security Income (SSI), Medicaid, vocational rehabilitation, and subsidized housing. Many people make the mistake of leaving assets to their disabled loved ones through a will. This is problematic because acquiring assets, such as a lump sum of money, can disqualify your loved one for these types of government assistance programs.

By setting up a special needs trust, instead of solely using a will, you can avoid these issues. Because the trustee has total control over the management of the funds, and the beneficiary does not, government program administrators, like the ones from SSI and Medicaid, ignore the trust assets when considering eligibility.

Special needs trusts can also be used to set up inheritance funds or proceeds from a settlement on behalf of the disabled person. This way, if your loved one is the plaintiff in a successful lawsuit or inherits assets, those funds will go into the trust and will not disqualify him or her from receiving those government benefits. On the flip side, if the beneficiary is ever sued, the funds in his or her special needs trust cannot be touched–they are not subject to any judgment.

What if we are not concerned with government benefits?

The beauty of special needs trusts is that they address the specific needs of the disabled person whereas other types of trusts do not. Even if a family is not interested in government benefits, they should still consider a special needs trust to address those specific needs. Furthermore, you never know what the future holds. There is no sense in sacrificing government services that could be beneficial for your disabled loved one in the future.

How can the beneficiary access the special needs trust?

Having the trustee directly give your loved one money could disqualify him or her for government benefits. Instead, the trustee can use the trust assets to purchase necessities for your loved one. The trustee can buy services and products, like personal care attendants, vacations, home furnishings, medical and dental expenses, education, vehicles, physical therapy, and even recreation.

Should I consider a pooled trust?

A pooled trust is a type of special needs trust that is managed by nonprofit organizations. These nonprofit organizations pool the money from multiple families and invest it. Each beneficiary still has his or her own separate account and his or her own trustee, chosen by the nonprofit organization. These appointed trustees even purchase things for the beneficiary, just like a trustee appointed by the family or the court would. If you are having a hard time coming up with someone who would be a good fit as a trustee, a pooled trust may be something to consider. Check your local nonprofit organizations to see what is available in your area.

How should special needs trusts be worded?

  • Most importantly, a special needs trust must state that the trust is intended to provide “supplemental and extra care” beyond that which the government provides.
  • State that it is not intended as a basic support trust.
  • Do not include a “Crummey Clause,” an estate tax provision.
  • Reference the Social Security Operations Manual and this specific parts in the manual that authorize the creation of the special needs trust.
  • Include the required language regarding payback to Medicaid.
  • Explain the exception to the Omnibus Budget and Reconciliation Act.
  • Include a copy of the relevant provisions form the United States Code.

Do I need a lawyer to set up special needs trusts?

Anyone can create a special needs trust, as long as the required language is included. There are plenty of good do-it-yourself books you can buy that will walk you through how to properly create a special needs trust. However, there may be times when your circumstances are a bit more complicated. For instance, if you are setting up a trust with money the beneficiary received from a settlement. In these types of cases, consulting an attorney is a good idea, because complicated and state-specific rules then apply. The best thing to do is to let a lawyer take care of your special needs trust for you. There are so many different requirements and details that experienced probate attorneys will be able to hash out for you.

Free Consultation with a Utah Estate Lawyer

If you are here, you probably have an estate issue you need help with, call Ascent Law for your free estate law consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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Temporary Orders Can Help Resolve Disputes

As you move through the divorce process, you could find that you must make a quick decision related to issues like child support or alimony. In these cases, you may request a temporary order, which will be in effect until a permanent order can be arranged and made official in your divorce decree.

If you and your spouse live separately, you must either reach an agreement about how you will share expenses or go to court and ask the judge to decide for you. If you and your spouse do agree, you can write a temporary agreement of your own, but if you do not, a temporary order from the judge is necessary to resolve these crucial issues.

Seeking a temporary order

To get a court order, you must file some paperwork in court. These papers are available for free in person at the court or online. You will likely need the following:

  • A request for your desired court order: The most common such form is an Order to Show Cause, which outlines exactly what you are asking for, such as temporary child support. It orders your spouse to appear in court at a certain time and date to argue why the court should not grant the request.
  • Supporting declaration: This is a written statement made under oath that outlines all the facts that justify the issuance of your desired order.
  • Proposed temporary order: This statement contains the exact relief you are seeking. The judge will sign it if he or she decides to grant your request.
  • Proof of service: By law, you must serve this paperwork to your spouse. The proof of service shows the court that you have abided by this responsibility.

Achieving a Financial Recovery After a Divorce

Once the dust has cleared on your divorce, it’s time to start looking toward the future. One of the first issues you should address is how you will ensure your long-term financial health.

The following are a few steps to help you achieve a financial recovery after your divorce:

  • Start right away. Do not, under any circumstances, put off building your finances back up. The sooner you start, the sooner you will achieve your goals. Credit, for example, takes a rather long time to build up, so there is no better time than the present to begin.
  • Have clear goals in mind. Do you want to focus on saving for your retirement? Are you looking to pay off specific debts? List the financial goals you have, and then create clear, specific plans for how you will achieve them.
  • Don’t shirk your savings. It might seem impossible to build up a savings when you suddenly have significantly less income at your disposal, but it’s important to make regular savings part of your routine. If you automatically extract a certain amount of money from your income each month, for example, it will be as though you never had it to begin with. This amount can be small to start with while you adjust to your new financial situation, but you should always be putting at least some money into savings or toward your retirement.
  • Cut your spending. It’s an unfortunate reality that you will not be able to maintain the same standard of living you had while you were married. Again, you have significantly less income coming in. This means you need to live within your means and be smart about where you’re spending your money.
  • Focus on self-improvement. Spending money to invest in yourself can be a great idea, especially if you are getting new training or education to improve your career prospects. This is an investment that will pay big dividends in the long run.

Free Consultation with Divorce Lawyer in Utah

If you have a question about divorce law or if you need to start or defend against a divorce case in Utah call Ascent Law at (801) 676-5506. We will fight for you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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