Most parents of special needs children understand that taking action steps to plan for the future is imperative. One of the most common ways to do this is by working with an experienced estate planning lawyer to put together a special needs trust. Beyond the basic terms of the trust, designed to protect a loved one with special needs years down the road if something happens to you, it’s important to think about the end game as far as the administration of that trust, too.
The purpose behind such a trust is to supplement benefits given by the government and to make assets inside the trust last as long as possible. Family members may sometimes be the trustee of such a trust. However, this does not always mean that such a person is familiar with the aspects of administering this trust.
Administration of this trust in line with state and federal laws is important because it could otherwise exclude the beneficiary from the government benefits he or she needs. For example, Medicaid eligibility regulations in New Jersey will only allow individuals to exclude money from the resource test to get that benefit if that money is inside a special needs trust.
In New Jersey, the state has to get advance notice of expenditures from the trust that exceed $5,000. Understanding these rules and ensuring proper compliance at all times is extremely important when actions are taken on behalf of a special needs person. Consulting with a lawyer who has experience putting together special needs trusts is strongly recommended.
The tax code on its own is quite confusing but it can become even more complicated when you’re thinking about leaving behind assets for a special needs beneficiary. One of the most common points of confusion in the U.S. tax code has to do with the gift tax.
While most people are familiar with the basic magic number of $14,000 which is what each individual can give to one other person per year. Some clarification and planning strategies are necessary for individuals with special needs beneficiaries. How you pass on assets to a beneficiary with special needs is critical. Because you do not want to do this in a manner that would compromise that person’s eligibility for government programs.
Special needs individuals frequently rely on government programs to help support them well into adulthood. It’s a good idea to talk over planning opportunities like trusts that can help to provide for an individual with special needs without removing his or her possibility of receiving assets or receiving benefits from these essential government programs. Consult with a knowledgeable estate planning attorney today to see how you can address this issue.
Parents of special needs children have unique needs when it comes to estate planning. As a recent article explains, parents of special needs children who have not yet created an estate plan should put it on the top of their to-do list.
Unlike the majority of non-special needs children, many special needs children will require constant care for the remainder of their lives. Additionally, many special needs children are not able to work or otherwise earn the income necessary to pay for their care. Therefore, planning for a special needs child includes not only leaving the proper amount of resources for procuring the proper care, but also helping to determine how that care will be provided.
However, planning for special needs children is not as simple as leaving ample resources and a plan for that child’s continuing care. This is because most special needs children already receive government benefits to assist in paying for their care. However, these benefits are need-based and will cease if the child no longer qualifies to receive them. Therefore, many parents of special needs children employ a special needs trust. This trust, rather than the child, owns the child’s inheritance. By using this trust, the money is not considered to be the child’s and he or she will continue to receive government benefits.