Special Needs Trusts

KENTUCKY SPECIAL NEEDS TRUST PLANNING ATTORNEYS
If you or a family member receives government benefits, whether it be Medicaid or Supplemental Security Income (SSI), you would not want to lose those benefits should you obtain income that would otherwise make you ineligible for government benefits. This can be a very complicated process if you are unfamiliar with estate planning and trusts generally. However, a special needs trust itself is not too difficult to set up. An attorney experienced in estate planning and special needs trusts in particular can help you make the process as smooth and seamless as possible, minimizing the amount of work you need to do.

A common situation where a special needs trust is necessary is in the case where someone is given a money award from a lawsuit, either from a trial or from a settlement. For example, if you received a cash award from a mass tort class action settlement, you may certainly need a special needs trust set up. Examples of such settlements include cash proceeds received as a result of injuries you suffered from ingestion of a dangerous drug or implantation of a dangerous or defective device. These settlement amounts can be quite large, and if they are taken into your account as part of your income, you may be disqualified from continuing to receive your government benefits.

A cash settlement is not the only reason a special needs trust may need to be set up. If a family member wishes to give you money or property, the safest way to do so is to put this property in a special needs trust to protect your government benefit eligibility. This allows a way for you to set up a trust for your own benefit so that you can be rest assured that your government benefits will not be compromised.

HOW DOES A SPECIAL NEEDS TRUST WORK?
In order to protect your government benefits, you need to set up a special needs trust where income can be set aside and not counted towards your income for purposes of determining your government assistance eligibility. There are many factors to consider when setting up a special needs trust, such as those listed below:

The beneficiary of the trust cannot receive money directly from the trustee, as this may have an impact on the beneficiary’s receipt of government benefits;
The money in special needs trusts can be used towards goods and services for the beneficiary, such as vacations, furniture, out-of-pocket medical and dental expenses, education, automobiles (and gasoline), personal care attendants, and recreation, groceries, among others;
It may turn out that if you receive a substantial amount of money from a loved one or from a lawsuit, it may be more beneficial for you to receive this money as income and risk losing your government benefits. This situation only applies in rare circumstances where the beneficiary will no longer have any need for the government benefits.
In order to set up a special needs trust, you need to consult with an attorney or have a family member consult with an attorney to get the logistics taken care of. The trust account must be set up before any funds can be distributed to you. Remember that the trust proceeds must go to the trust account first, and then to you in the form of essential life needs.

WILL THE GOVERNMENT BE ABLE TO SEEK REIMBURSEMENT FOR BENEFITS PAID TO THE BENEFICIARY?
Depending upon whether your special needs trust is comprised of money earned through income, inheritance or a settlement award, your trust account may need to pay back whatever part of the trust funds are unused at the time of your passing. This type of special needs trust is called a first party special needs trust, and requires annual reporting to the government.

If your special needs trust account consists of funds solely provided by a family member and is not deemed income, the trust is called a third party special needs trust. In this case, the government cannot seek any reimbursement from the estate funds at the time of your passing. Further, there are no annual reporting requirements with this type of special needs trust.

WHO NEEDS A SPECIAL NEEDS TRUST?
Most people tend to think of the elderly when considering special needs trusts. This makes sense as the elderly tend to have physical ailments that leave them disabled and unable to work. However, special needs trusts are used for people of all ages. For example, if you are a young adult and involved in a serious car accident, you may never be able to work again. In such cases, a special needs trust will ensure that you are taken care of in order for you to receive necessary life care.

WHO SHOULD BE THE TRUSTEE?
If you have the mental capacity to make the decision on your own, you can choose who you want the trustee of your special needs trust to be. This typically is a family member, but could be anyone of your choosing. You should be sure that the trustee is someone you can count on and be sure to have an attorney monitor all trust transactions. Oftentimes, beneficiaries get taken advantage of because trustees fraudulently withdraw money from the special needs trust for their own benefit. For this reason, it is especially important to seek the assistance of an attorney who can help you keep track of your trust account’s activities to ensure all withdrawals are going to you in the form of life necessities.

CONTACT GOEING GOEING & MCQUINN TODAY FOR A FREE CONSULTATION
If you feel a special needs trust is necessary for you or a loved one, contact the law office of Goeing Goeing & McQuinn to discuss your situation. Our seasoned and skilled estate planning attorneys have helped thousands of Kentucky citizens set up trusts that meet their needs. Government benefits are essential for many Kentucky citizens, and a special needs trust will ensure that you do not lose those benefits. Call our office today to schedule your free consultation. We can be reached at (859) 904-2045.