Special Needs Trusts: Questions and Answers

Posted by Patricia Manko on Tue, Jun 26, 2012 @ 01:07 PM

Q & A resized 600Q: We have one question about what we can provide our sister who is incompetent and living in a home from our special needs trust. We understand that we cannot give her money from the trust for food or shelter. The question that we cannot seem to get answered is whether the trust can purchase additional clothing for her or whether her relatives can provide clothing for her and get reimbursed from the trust?

A: I am not sure in which state your sister resides, but there is a good resource called "The Trust Administration Manual, A Guide for Trustees" by Barbara Jackins, et al. Also, another helpful resource would be the Special Needs Answers website orSpecial Needs Alliance.

Q: I have a son with special needs. He is 8 years old and I do not have a will yet or a special needs trust. Where should I start?

A: You could start with an attorney to get a will and special needs trust done. We have a list of good people, but it depends on where you live and a few other things in order to find the right attorney for your situation.

First is the size of your estate and/or net worth. Your net worth is a total of all that you own (such as your savings, investments and insurances) minus what you owe (which is your mortgage, debts, loans, etc.). Generally speaking if this is over $1,000,000 then you may want to consider working with an attorney who is also familiar with special needs trusts and estate tax planning.

Then it depends if there is money coming to your son now, or during your lifetime, or upon your death. This would determine the type of trust that would be required. You should also consider who the trustees will be and how much help they will need. Some law firms can serve as trustees with a family member involved for a nominal fee, others serve as the sole trustee for which the trust is charged a higher fee, and others do not serve as trustee at all.

You would also want to have your own Power of Attorney, Health Care Proxy created in addition to your Will and Special Needs Trust.

Q:If a family sets up a special needs trust and funds it, what happens if the individual it was set up to help dies before the funds in the trust are used up? 

A: If the beneficiary of a special needs trust (or just about any type of trust) dies before the funds are depleted, the remaining funds are distributed based upon the directions detailed in the trust document. They can be any other family members (siblings, aunts, uncles, nieces, nephews, cousins, etc.), any individuals, or any charities/organizations of the grantor's choice. This is why it is most important to name successor beneficiaries.

Q: My mother has a trust and we need to put in a special needs addendum. Do you have any forms that we can use to fill out and place in her trust?

A: This is not as simple as inserting a form. Legal documents need to be reviewed by attorneys and appropriate revisions need to be drafted by them. Unfortunately, we are not attorneys and cannot provide such information that you requested.

I suggest that you contact the attorney who drafted your mother's documents initially. If that is not an option, you should contact a lawyer in her state of residence who is knowledgeable in disability law and special needs trusts.

Tags: Special Needs Financial Planning, Special Needs Trusts

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