A Special Needs Trust for the disabled between 18 and 65 years of age.
Providing for our disabled.
A Special Needs Trust sounds scary as if there is not enough to worry about, how to protect and provide for the needs of a disabled child/adult. The laws are quite clear about the amount of financial net worth a person between 18 and 65 can have and still receive state and federal aid. Most people who have lived any length of time know that health can cost you everything and then some. So for no other reason but to have help, state and federal aid is appropriate. Here is a scenario that plays out daily in our communities: John and Jane Doe have a child with a disabling disease. They also have two more children that are perfectly healthy and going to college. John and Jane scrimp and live with a minimum to help. John goes out the door to work and whether by accident or health dies that day. Jane is trying to pull all to gather and take care of the financial and legal demands of this unanticipated death. Of the two children in college both qualify for survivor’s benefits, as does Jane, the disabled child can receive this benefit only if Jane involves the Social Security Administration, which is fine, time consuming but fine. In the meantime, life insurance pays out which is great for the older two kids and Jane, not so for the disabled child. Prior to cashing the benefit for this person Jane needs the services of a lawyer.
Why? You may be asking. The disabled child will never be able to live totally independent and if this child receives the bulk of the insurance now, that money will have to be spent down prior to the receipt of benefits again. Here is what you may not understand, but certainly someone should have told you. The meager amount paid by federal and state is far less then the poverty level in America. And if paid out to the government upon receipt from this estate, it is almost assured the money will be gone within months. However if the money is paid to a Special Needs Trust (SNT) for the disabled there are specific benefits, which the disabled would not get otherwise.
The rest of the family has received their money in the original pay out by the insurance. The disabled child still lives with Mom and receives services from the government. Let’s just say that this person has a debilitating disease, such as MS, Huntington’s, or any debilitating progressive illness. The person will need more and more medical equipment to just get through each day. The money in the SNT is there to help compensate for durable medical equipment. If the person is using a wheelchair and in two years needs a motorized one – DSHS will entertain the request however, it very possibly will take over a year to get this to the person. In the mean time, the person will fail dramatically due to the inability to interact with others, including the medical team. Another example, lets say the person has MS and as a doctor will tell us. MS and summer heat are not compatible. Easily fixed with an air conditioner – DSHS will not even entertain this, nor will they discuss an automobile that is handicapped accessible. Which means calling a cab (we can double the cost, due to the special equipment necessary), and who will pay that, it has to come out of the person’s discretionary funds of the person (usually $62.00/month). I am sure by now you see that a SNT is the way to go. The handicapped person may very possible live another 60 to 70 years. What about Dental and I can go on and you have the picture. The SNT can pay for the air conditioner, a T.V. and so much more. Look around your home and see what you have now would this be possible when living on $62.00/monthly? Certainly there are guidelines on the spending of funds from a SNT, but you will be surprised at what can be purchased to make life more meaningful and comfortable.
The SNT will require an administrator and it is suggested if at all possible the family pick this person. A family member is usually more appropriate, however this is not always easy to negotiate. If a lawyer or court appointed administrator, the fees for this person will be deducted from the lump sum of the SNT, usually in monthly or quarterly fees. I leave this for your judgment.
Please look at this as a tool to help make lives easier and more meaningful. If used appropriately and within the guides of the law, this is a very good tool.
Next week lets talk about the professionals within the community who administer the legal tools we have talked about so far.