Special Needs Trusts

[Joy Lammers]

My 10 year old DD is special needs and it has been recomended to set up a Special Needs Trust in case she would inherit money from a Grandparent or such so that she doesn't loose her benefits. We called a lawyer and it will cost over 2500.00 to set one up. We really can't afford it and was wondering if anyone knows of any programs to help with it or have set up a SNT on their own. We live in WY and there are few lawyers that deal with them in our City and would have to travel 150 miles.

 

[plummer925]

Most state and federal disability's give a grace period before losing benefits. I would say don't spend $2500 on a "maybe". Instead, wait. IF she gets an inheritance, THEN take $2500 out of it and set up a trust. Grace periods are TYPICALLY 90 days but you'll want to check with whatever benefits you are getting. Good luck.

 

[Rekenna]

The Lawyer you spoke with, is that the only Special Needs Trust lawyer available in your area (they tend to be few and far between)?

What about any type of grants in your area that would help pay for something like this? Who did you learn about Special Needs Trusts from-did they have any advice or resources for you to try?

I need to have one set-up for DS5 as well, we have learned some about it at a work group I am involved in and I know there is only one Special Needs Trust Lawyer in our area.

Some things coming to mind as well-without being crass, do you know how much the inheritance will be? Is it a nice amount that will provide a nice $$ cushion for the SNT, will you still have to have other resources to fund it moving forward, is it enough that it justifies the price tag of $2,500?

For the immediate future would it be better for the grandparents to inherit the money to Mom & Dad until a SNT can be established-if it ends up being needed at all? Or would this cause an issue-family money, taxes, etc.?

I'm sorry I don't have any better suggestions-I was trying to think of different scenarios and strategies you could try.

 

[mommytoxzande]

I don't have an answer for you, but wanted to suggest you ask this question on the DISabilities board. You may be able to get some help there as well.

Good Luck

 

[ssawka]

Check with support organizations in your area. See if any of them offer a pooled trust. They are usually cheaper then setting up an individual trust.

I can tell you that $2500 is about right depending on what the lawyer will be doing. We paid about $2500 for DDs special needs trust along with our wills and power of attorney, but that was about 5 years ago.

 

[Sadie22]

Contact your local bar association and ask for suggestions. Contact the Legal Aid Society in your area. There is a lot that can go into setting up such a trust. That would not be out of line for such documents in my area. That price likely includes much more than drafting one document, but also discussing the parents' estate planning, wills, guardianship, powers of attorney, medical directives, and so on.

This is not something you can put off until an inheritance or other event happens. Having a trust set up properly versus not can make a big difference. I would strongly encourage you to hire an experienced attorney and get your paperwork in order before you (or your child's successor guardians) have occasion to wish you had done so.

 

[MarieS]

I have a trust set up for my 2 boys who have special needs. I didn't pay anywhere near that amount of money however. Can you call other estate/trust lawyers to see if someone else could do this for you? Have you tried asking for names from disability groups in your state? Our lawyer is a trust/estate lawyer and we called to see if he has experience in SN trusts.

Just a little info I learned about SN trusts. The main reason for the trust is to prevent any inheritance from counting against you if you are eligible for government benefits. For example, if your child with special needs receives social security income or medicaid, money in the SN trust can't be counted against them. The trust pays for things either not covered or over and above. In Indiana, you are only allowed $1500.00 to qualify for medicaid so if Grandma would leave you money that makes you go over, you would lose your benefits until the money was "spent down."

Parents or grandparents should leave money to the special needs trust and not the person directly. In my situation, I have a special needs trust set up but right now it is unfunded. My life insurance will fund it and the trust is listed as beneficiary. I am the administor of the trust and then I have soemone else listed upon my death. A relative who is planning on leaving money to the kids, updated their will to have the name of the trust and not the kids themselves as beneficiary.


edit: Just saw the pp and agree that the price quoted makes more sense if it includes other documents.

 

[akcire]

My 10 year old DD is special needs and it has been recomended to set up a Special Needs Trust in case she would inherit money from a Grandparent or such so that she doesn't loose her benefits. We called a lawyer and it will cost over 2500.00 to set one up. We really can't afford it and was wondering if anyone knows of any programs to help with it or have set up a SNT on their own. We live in WY and there are few lawyers that deal with them in our City and would have to travel 150 miles.

Some charities usually diagnosis specific will have lawyers who do it for a reduced flat fee. My husband sets up 2 a year on a pro bono (free) basis for a Down's syndrome group. He would do more but has other time consuming charity obligations.

You could call the bar association or the public guardians office. Also look for legal aid groups. Your child has little to no income so they may qualify for free or reduced fee services from a private organization. In Chicago I'd refer you to cvls Chicago volunteer legal services, no idea in wy

 

[StitchesGr8Fan]

Just a thought, if there is someone who might be leaving DD a substantial inheritance, can they help fund some of the attorney fees now to help protect the assets? I bet they don't want to see it have a detrimental effect on DD either

 

[thebeesknees]

That sounds about right $-wise. My parents set one up last year for my sister. It is currently minimally funded. The rest will come when they pass and the money from their estate gets put into the trust for her. It is a lot of hassle to get set up, but so, so important. Before they set it up, they took a class at the local hospital about setting it up, so you may look into that and see if the hospital or social services have any recommendations as to people who could possibly do it at a reduced rate for you. My parents' regular lawyer did not feel comfortable setting it up because that is not his area of expertise so they decided to go with someone familiar with the state laws so that they don't run into problems down the line due to incorrect filing, etc.

 

[Joy Lammers]

Thanks for all the advice, I am going to check into all of them. At this point most of the concern is if something would happen to my DH and I and the life insurance money would go to DD (only child) and then if her one grand mother dies she will inherit enough for her to loose her benifits but not enought to pay for everything for the rest of her life.

 

[okeydokey]

Do these trusts work for adults as well? My BIL is living on disability for mental health issues, he is in his late 30s. My FIL is afraid to leave anything to him in his will because he doesn't want him to lose his benefits. His plan is to leave it to my DH and have my DH feed it to him a little at a time over the years. I would rather pay someone else to do it. I don't want any hard feelings to emerge between my DH and his brother over who has control of whos money.

 

[dsneprincess]

Do these trusts work for adults as well? My BIL is living on disability for mental health issues, he is in his late 30s. My FIL is afraid to leave anything to him in his will because he doesn't want him to lose his benefits. His plan is to leave it to my DH and have my DH feed it to him a little at a time over the years. I would rather pay someone else to do it. I don't want any hard feelings to emerge between my DH and his brother over who has control of whos money.

I would be very careful with this plan. I know my friend's parents had similar thoughts & she HAD to have the trust in place before her second parent passed to protect her family. She was lucky she saw a lawyer before it was all left to her. It is not only tax implications; I don't remember all the reasons why, but something about how government looks at the inheritance, maybe? I know she got very lucky by getting the information that she needed to get the special needs trust in place. I also know it was a lot of time, effort & determination to get. BTW, friend & sibling were both adults. She also needed to establish "guardianship" as that wasn't taken care of properly either.

 

[daughtersrus]

Do these trusts work for adults as well? My BIL is living on disability for mental health issues, he is in his late 30s. My FIL is afraid to leave anything to him in his will because he doesn't want him to lose his benefits. His plan is to leave it to my DH and have my DH feed it to him a little at a time over the years. I would rather pay someone else to do it. I don't want any hard feelings to emerge between my DH and his brother over who has control of whos money.

Yes, they work for adults as well.

My DD has a rare genetic disease and is disabled. We set up a Special Needs Trust a few years ago. She was injured by a staff member at school and was getting a small settlement. We delayed the settlement until the trust was in place. DD is now 18yo so she started getting SSI. The trust will continue for her lifetime.

We found a VERY reasonable lawyer here in the Chicago suburbs. She has a sister with DS and does them at a greatly reduced rate because of it. This was about 10 years ago and we only paid $400.00

One thing that we were told was to ask anyone that was going to leave her money to not only name the SNT as the beneficiary but to exclude DD by name. That way, there won't be any confusion that DD was left out on purpose.

We did have to submit the SNT to the court before her settlement and again when we applied for SSI for her.

 

[Darcy03231]

I work in a law office. This is not an area where you want to "do it yourself."

You have no idea how many people come in with wills, trusts, etc. that were a form off the internet or a "do it yourself" kit after a person has passed away and then find out they don't comply with the state or federal laws. It then costs the estate a lot of money to get everything straightened out - much more than if the person who created the document in the first place just had it professionally done in the first place.

You might be able to find a lawyer to review documents you create yourself to make sure they comply with state and federal laws, but most lawyers who specialize in this field won't do it.

 

[ssawka]

I would be very careful with this plan. I know my friend's parents had similar thoughts & she HAD to have the trust in place before her second parent passed to protect her family. She was lucky she saw a lawyer before it was all left to her. It is not only tax implications; I don't remember all the reasons why, but something about how government looks at the inheritance, maybe? I know she got very lucky by getting the information that she needed to get the special needs trust in place. I also know it was a lot of time, effort & determination to get. BTW, friend & sibling were both adults. She also needed to establish "guardianship" as that wasn't taken care of properly either.

This is exactly why you should not try to skimp when setting up the trust. Shop around to make sure you are not getting ripped off, but it is imperative that you get someone that knows what they are doing. A special needs trust is a very different animal then a will where you can just fill out a template and be done.

 

[akcire]

Thanks for all the advice, I am going to check into all of them. At this point most of the concern is if something would happen to my DH and I and the life insurance money would go to DD (only child) and then if her one grand mother dies she will inherit enough for her to loose her benifits but not enought to pay for everything for the rest of her life.

You don't want life insurance made payable to the child. You want to have the trust be the beneficiary. You also need to figure out who could be the trustee in the event of your death. (Not sure if your daughter could-also not willing to read every post you EVER wrote on the dis to try an decide ).

Life insurance can take a while to pay out and miss any waiting period for asset protection exemption. I am the successor trustee for a bunch of my friends trust both with special needs kids and typical kids. Who you choose is very important. I typically tell people that if no family or friends are available, and you want someone without any money issues-don't want anyone tempted-cause once the money is gone its gone, to pick an institution as the successor. It is fine to have separate guardians and financial trustees. Aunt Jane might be great with the kid but bad with the checkbook etc

 

[lost*in*cyberspace]

You don't want life insurance made payable to the child. You want to have the trust be the beneficiary. You also need to figure out who could be the trustee in the event of your death. (Not sure if your daughter could-also not willing to read every post you EVER wrote on the dis to try an decide ).

ABSOLUTELY. NEVER EVER leave money directly to a minor, whether life insurance, through a will, etc. If you do, a guardian for the money will have to be appointed by the court and this process can be expensive if it is contested. Get a trust in place for the child and leave the money to that. I am speaking from a very, very painful and expensive experience with this issue.

 

[Sadie22]

I work in a law office. This is not an area where you want to "do it yourself."

You have no idea how many people come in with wills, trusts, etc. that were a form off the internet or a "do it yourself" kit after a person has passed away and then find out they don't comply with the state or federal laws. It then costs the estate a lot of money to get everything straightened out - much more than if the person who created the document in the first place just had it professionally done in the first place.

You might be able to find a lawyer to review documents you create yourself to make sure they comply with state and federal laws, but most lawyers who specialize in this field won't do it.

I was speaking from work experience as well. It's not just that the cheap documents do not comply with the laws in the state where the decedent was domiciled. It's also that they do not achieve what the decedent actually intended or what will best suit the situation of the heir(s) should special needs or the like be involved. The estate may not be able to get matters straightened out to the extent that is the best possible solution for the special needs person. It's a shame when these sorts of things happen.

Specialists usually will not extensively review the work of others because that can take longer than starting over with their own documents which they know are up to date, compliant with current law, and will achieve what is necessary.

Leaving money or insurance directly to a family member and stating it is to be used for X, Y, or Z can be a complicating factor rather than a solution. Such monies might be considered income to the special needs person at the time of use or gifts which might not be treated the same as money from an SNT would be. What if there's a divorce situation? Some of the funds could be lost that way. What if the designee dies after receiving the funds? They would then be part of his or her estate.

It's important to thoroughly discuss all the contingencies with a competent special needs attorney. It's well worth his or her fees.

 

[PatsMom]

I have to agree with those who say you really need to spend the money to get an attorney who specializes in this area to do your documents. If they are not done correctly, your daughter could be disqualified from benefits and forced to "spend down" an inheritance prior to being eligible for benefits to resume. The purpose of the SNT is to provide for things that government benefits will not - examples might be vacations, clothing, hair appointments, reading material. I also believe that many recommend (and some states may require) that the trust have a protector (usually a family member) who is responsible for keeping up with the well being of the beneficiary. There would also be a trustee who would be responsible for investments and approve or disapprove the protectors requests for disbursements.

No money should ever be left directly to the SNT beneficiary. I have set up a trust for my niece and asked my mother to leave my share of her money to it. My niece is profoundly disabled and will never be independent. She will need the money a lot more than I will. Right now my sister in law is the protector (or guardian) some call it. A financial advisor I work with is the trustee. When my sister in law passes away my older niece will take over as protector to keep up with her sisters needs.

Other family members plan to leave some money to the trust as well so that my niece's needs will be taken care of. This is a specialized area though and you shouldn't try to "do it yourself".