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Lombard special needs trust lawyerIf you are considering ways to provide for a loved one with special needs, you have probably discovered the inherent conflict with giving money directly: Any funds you contribute could make this individual ineligible for benefits under the Social Security SSI program, Medicaid, and other forms of public assistance. Your heart may be in the right place, but you could be doing more harm than good when it comes to qualifying for needs-based programs that focus on income and assets.

With this information in mind, you may have also come across special needs trusts when researching ways to provide support. In short, this legal structure allows you to place funds in a trust managed by a trustee who makes permissible distributions that enable your loved one to still qualify for public programs. An estate planning lawyer can help with the details specific to your case, but you might benefit from knowing a few basic things about special needs trusts.

Creating a Third-Party Special Needs Trust 

You establish a third-party trust when you make the arrangements for a disabled beneficiary, often by appointing yourself as trustee. A first-party special needs trust would be one created by the person with special needs, such as when he or she received a settlement or inheritance. The distinction is important, since a first-party trust must pay Medicaid back when the beneficiary passes.

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Lombard estate planning lawyersFor the more vulnerable members of society, especially the disabled and the elderly, life can become a complex dance of government forms and applications. Social Security (SSI/SSDI) is a prime example of this, with lengthy proofs required as to why disability is necessary and how to show you are not ‘gaming the system.’ However, the strictures of being on disability mean that a person is not entitled to possess assets above a certain amount, which can be prohibitive. Special or supplemental needs trusts (SNTs) have been used for years to help address this disparity.

What Is the Purpose of an SNT?

The primary purpose of an SNT is to help a disabled or elderly person afford better care than that to which they would otherwise be entitled. While Social Security disability (SSDI) has no asset limit, many people do not qualify for it, and instead apply to receive SSI (the program for low-income workers). However, when one is ruled eligible to receive SSI, one is entitled to retain only a certain amount of assets - for most people, no more than $2,000 in value. This is tenable for some, but for many others it amounts to enforced poverty. For those who are physically disabled, having such minimal assets and no ability to work (because a bank account and a paycheck are resources) can result in privation.

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Posted on in Estate Planning

Lombard estate planning lawyerAs you look ahead to a time when you will no longer be around to care for your loved ones, you have probably given a great deal of thought to those who rely on you the most. You may have a son or daughter or even a sibling with a disability or other types of special needs who is unable to care for him- or herself. While you may have been able to care for a loved one with special needs during your lifetime, providing for him or her after your death could present significant challenges and may require you to establish a special needs trust in your loved one’s name.

What Is a Special Needs Trust

A special needs trust, sometimes called a supplemental needs trust, is a tool that can allow the assets placed under the trust to be used for the care of a person with a disability or special needs without affecting his or her eligibility for government assistance programs. Special needs trusts are often funded by large, lump-sum settlements or through gifts and inheritances. Without a properly-drafted special needs trust, leaving part of your estate to a loved one with disabilities could potential disrupt the delicate balance of government aid programs upon which he or she relies.

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Lombard estate planning attorneyMaking any kind of estate plan is an emotional task, especially when the arrangements you are creating impact the ones you love most. Estate planning can be particularly challenging when you have to consider a loved one with special needs, as the circumstances surrounding their health and finances may mean more time and attention spent on details on your part to ensure they are properly cared for.

If your loved one’s capacity for self-care is limited due to a mental or physical disability, you thankfully have resources and options available to you. Illinois law allows you to offer assistance to your disabled loved one and protect their best interests, beginning with two special estate planning tools: a guardianship and a special needs trust.

Obtaining Guardianship

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Lombard estate planning attorneyPlanning a trust can initially feel like an overwhelming task, especially when arranging it in tandem with a will. The reality, though, is that establishing a trust can be a very effective tool if you want to be able to transfer your property or certain assets to someone while you are still alive. Whereas a will is a plan that is only executed after you pass on, a trust is a planning tool that can be carried out while you are still living. 

What Is the Purpose of a Trust?

The state of Illinois allows a trust to be “created by a will, deed, agreement, declaration or other written instrument”. State law says that the person establishing a trust may indicate any rights, powers, duties, or limitations applicable to the chosen trustee when establishing the trust. Additionally, the grantor (the person creating the trust) may also specify any immunities that are applicable to the trustee or beneficiary.

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