As this month is dedicated to Autism and Special Needs I thought I would once again write about a Special Needs Trust with special emphasis on grandparents. A grandparent of a child with autism, for example, that is on benefits is faced with an emotional estate planning dilemma. How can I provide support for my grandchild when I die without placing his or her governmental benefits in jeopardy? I want to provide some sort of help because I know my grandchild may never be able earn monies to support themselves.
Leaving monies outright after your death to a grandchild with a special need is most likely going to make the grandchild ineligible to continue to receive governmental benefits. On the other hand, if you leave the grandchild nothing, how will he or she be able to supplement needs that are allowable? Here are some items that a special needs trust can pay for without jeopardizing eligibility for public benefits – automobile (car, van)- computer hardware, software and internet programs-clubs and club dues- nonfood grocery items- hobby supplies. This is just a sampling of items allowable for purchase by a special needs trust.
Establishing a special needs testamentary third party special needs trust in the will of the grandparent for the life of the grandchild may make most sense. Upon the death of the grandchild no repayment is required by the third party special needs trust to state Medicaid agencies that have provided benefits to the grandchild. The remaining assets of the trust upon the death of the grandchild can be distributed to other family members as directed by the grandparent in the trust. A first party special needs trust is established with one’s own assets and upon death these assets are subject to repayment. Caution, Special Needs Trusts are a complicated area of law, so the advice of an attorney well-versed in special needs trusts is crucial.
Due to the complex rules of special needs trusts it is not recommended that a family member serve as a sole trustee of a special needs trust. A professional trustee or a corporate trustee, such as a bank trust division or a trust company, is a better choice. Having the family serve as co-trustee with the corporate trustee is another choice. The trustee is given sole and absolute discretion in making distributions. The trustee needs to be familiar with the legal requirements of special needs trusts and with government benefit programs. Also, it is of importance that the trustee(s) be free of conflicts of interest with someone who may be a remainder beneficiary of the trust.
I hope this article has provided some food for thought for those of you that are faced with this issue.