SPECIAL NEEDS PLANNING

WHAT IS SPECIAL NEEDS PLANNING?
Special needs planning is estate planning done by the family and friends of a person with a disability-and sometimes by the person with a disability herself-with the goal of enhancing the person with a disability’s quality of life without jeopardizing the government benefits that provide her with essential services and support.

Disabling conditions may result from illness, injury, accident, or aging, and can occur at any life stage. Many people with disabilities must rely on government benefits, such as Supplement Security Income (SSI), Section 8 housing vouchers, or Medicaid, to meet their essential needs for food, shelter, medical care, and long-term or nursing home care. Many government benefits that are essential to the health and welfare of individuals with a disability are unavailable or reduced if the applicant or recipient has more than a modest amount of money or other assets in her name. Benefits may also be cut if the recipient receives assistance, goods, or services from others, including friends or family. Special needs planners work to ensure the person with a disability does not have control over more money or assets that the complex rules established by federal, state, or local governments allow. Special needs planners also educate family and friends about the types of assistance they can provide without jeopardizing the person with a disability’s assistance.

CREATING A SPECIAL NEEDS PLAN
Special needs plans usually involve establishing a special needs or supplemental needs trust. The individual who establishes the trust is called the trustor (or grantor) and the person who receives the benefits of the trust is called the beneficiary. The following people are frequently trustors of special needs or supplemental needs trusts:

• Parents, grandparents, siblings or other relatives and friends of the beneficiary:
  Friends and relatives of the person with a disability can establish a trust during their lifetime (an “inter vivos trust”) or can have the trust established by their Will after they die (a “testamentary trust”). Testamentary trusts are not funded until the grantor dies. Inter vivos trusts can be funded during the grantor’s life time and may be preferable to testamentary trusts if multiple people intend to make contributions to the trust. The trust can direct where any funds remaining in the trust after the original beneficiary’s death should go.
• Spouses
  The spouse of a person with a disability generally establish testamentary special needs trusts. The terms of this testamentary special needs trust can direct where any funds remaining in the trust after the original beneficiary’s death should go, including to the couple’s children.
• Children
  Adult children sometimes establish an inter vivos special needs trust to benefit their parent who has a disabling condition. When the parent dies, the trust can direct where any funds remaining in the trust should go.
• The individual with the disability
  In some instances--particularly when the disabling condition arose from an accident, workplace injury, or because of medical malpractice--the individual with the disabling condition may fund the trust with his or her settlement money. These trusts, called “self-settled” trusts because they are established with the beneficiary’s own money, are governed by more restrictive rules than trusts funded with other people’s money. In addition, with limited exceptions, the funds remaining in the trust after the beneficiary’s death must be used to reimburse the government for the amount of assistance the government paid to or on behalf of the beneficiary.