A special needs trust (sometimes called a "supplemental needs trust") is a specialized legal device designed to hold assets in the name of a person who is not legally competent to be responsible for the property in question. In order to qualify as the beneficiary of a special needs trust, the person in question must have a mental or physical disability or have a chronic illness. Children with special healthcare needs, the elderly, or people with birth defects or other lifelong ailments are most often the beneficiaries of these trusts.
The primary advantages of putting assets into a supplemental needs trust account is that any assets therein aren't counted toward governmental needs tests -- for example, even if someone had a million dollars in a supplemental needs trust, they could still qualify for Medicare, SNAP, SSI, subsidized housing, and so on.
Furthermore, because assets in trust are not subject to liens or seizure, a person with a special needs trust isn't putting their future healthcare at risk if they become mired in credit card debt or get sued in a personal injury case. It's simply the safest way to make sure that their current and future health care needs will be taken care of.
The money in a special needs trust can only be spent for a single purpose: to make up for any healthcare needs that the government isn't already caring for. Of course, there is a broad range of things that can qualify as "healthcare needs" -- for example, purchasing a new home that is better accessible for the disabled beneficiary is a perfectly allowable expense, as are vacations and entertainment for people whose condition prevents them from leaving their home often. Children with special healthcare needs can use (or, more accurately, their beneficiaries can use) the money to cover purchases of toys, 'field trips', or even pets so long as the ultimate goal is to improve their quality of health.
The law prevents anyone 65 or older to be named as the beneficiary of a special needs trust -- so creating such a trust when you're 64 is the best way to ensure that your future senior health needs are looked after. For a child or middle-aged person with special healthcare needs, the trust can be created at any time, but generally 'as soon as you can' is the best answer.
Call Schmidt Law Firm at 888-459-3077 -- we'll help you write up and file a special needs trust for your disabled or ill loved one immediately. Call now!
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