Special Needs Planning

Special Needs Planning

Special Needs Planning is more than just drafting a special needs trust (SNT). Comprehensive special needs planning requires an understanding of not only drafting SNTs, but also the public benefits program rules and regulations we are trying to preserve through the creation of the SNT.  Mitchell, Brown & Associates regularly advises persons with disabilities, families of persons with disabilities, and professional trustees on the creation, implementation, and administration of a special needs plan. This can include creating or modifying SNTs, advising about ABLE accounts, engaging with the public benefit agencies (Medicaid, Social Security, Public Housing, etc.) and more.

There are some frequent misconceptions about Special Needs Planning. Below are a few frequently asked questions clients often have.

When should a Special Needs Trust be set up?

Parents may consider setting up a Special Needs Trust when they begin their estate planning. If their child with a disability will likely have long-term medical or support needs, the SNT can be a vehicle to supply the funding to provide lifetime quality care. Even if the child’s future prognosis is unclear, it is never too early to put plans in place for contingencies such as the parents’ sudden death or disability.

How is a Special Needs Trust set up?

A SNT can be created either on its own, often called a standalone SNT, or via a client’s estate plan. When a SNT is part of other estate planning documents, like embedded in a Will or Trust, this is known as a Testamentary SNT. A Testamentary SNT is not “activated” until the creator of the Will or Trust passes away, therefore it cannot receive funding before that time.

The person allowed to create a SNT will depend on the kind of SNT we are creating. It is most common that either families are creating SNTs for the benefit of their disabled loved one as part of their overall estate plan, or that a person with a disability is creating one for themselves.

Managing the Special Needs Trust

Having a SNT requires that a trustee be appointed. A trustee is one who manages another’s property and may be a person or an institution, such as a bank or trust company. In this case, the trustee is the manager of the trust and has general unlimited discretion to use trust proceeds provided for the needs of the individual with a disability (known as the beneficiary of the trust). The SNT should be drafted in such a way as to direct the trustee how to use the trust’s resources for the individual’s needs.

Trustees should have good money management and/or financial skills. The SNT will likely exist for a long period of time. Trustees should be chosen with longevity in mind, and the trust itself should be drafted to adjust to changing circumstances, such as the substitution or removal of a Trustee.

After the death of the individual with a disability, the trustee oversees the final arrangements and the SNT usually ends. It is important to discuss all of these details with your attorney to ensure the SNT works as well as possible for the disabled beneficiary.

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