Special Needs Trusts

Planning for the long-term care and financial security of a loved one with disabilities is an important task, but it doesn’t have to be an overwhelming one. While a lot goes into the planning process, you never have to tackle this challenge on your own.

Working with a Montgomery County special needs trusts attorney can help families create a trust structure that works for them. Call today to learn how we can help.

What Is a Special Needs Trust?

A special needs trust is a type of trust that has a very narrow purpose. Instead of being a major part of your estate plan, these trusts exist to provide additional support to disabled loved ones who will likely need the support of government benefits for the rest of their lives.

Programs such as SSI and Medicaid have strict income and asset limits, and providing a person with disabilities direct support could violate them. The end result could be the delay or termination of the benefits that person relies on. With a special needs trust, it’s possible to provide your loved one with support that won’t impact their benefits eligibility.

These trusts can only pay for certain things that aren’t covered by programs like Medicaid. They include:

• Medical expenses not covered by insurance
• Therapy or rehabilitation services
• Education expenses
• Transportation
• Recreation
• Personal care items

The trust cannot generally be used to provide unrestricted cash distributions directly to the beneficiary. A Montgomery County special needs trust attorney can help determine which type of trust best fits the family’s goals and financial circumstances.

First-Party Trusts

A first-party special needs trust is funded with assets belonging to the person with disabilities. These trusts are often created when the beneficiary receives money through a lawsuit settlement, inheritance, or other financial recovery.

For example, a person injured in an accident may receive a substantial settlement that would otherwise disqualify them from SSI or Medicaid. A first-party trust allows those funds to be preserved while maintaining eligibility for benefits.

A Montgomery County special needs trusts lawyer can help families structure first-party trusts correctly and ensure compliance with applicable regulations.

Third-Party Trusts

A third-party special needs trust is funded with assets belonging to someone other than the beneficiary. Parents and grandparents commonly create these trusts as part of their estate planning.

These trusts are often funded through:

• Gifts from family members
• Life insurance proceeds
• Inheritances
• Estate plan distributions

Unlike first-party trusts, third-party trusts generally do not require Medicaid reimbursement after the beneficiary’s death. This allows the remaining assets to pass to other family members or beneficiaries in accordance with the trust terms.

Third-party trusts provide families with greater flexibility in long-term planning. Parents often use these trusts to ensure that future inheritances do not interfere with government benefits.

Pooled Trusts

A pooled trust combines the assets of multiple beneficiaries into a single trust managed by a nonprofit organization. Although the funds are pooled for investment purposes, each beneficiary maintains a separate account.

Pooled trusts are often used when the amount being placed into the trust is relatively modest and may not justify the expense of creating and administering an individual trust.

These trusts can be especially helpful for:

• Smaller personal injury settlements
• Unexpected inheritances
• Older beneficiaries who need immediate planning solutions

While pooled trusts can provide an effective solution in certain situations, families should still carefully evaluate whether this option best meets the beneficiary’s long-term needs. That’s where the guidance of a Montgomery County special needs trusts attorney comes in.

When Is the Right Time to Set Up a Special Needs Trust?

The best time to establish a special needs trust is usually before financial issues arise. In general, there’s no reason to delay this process, since having everything in place ahead of time reduces the risk of future issues.

Parents of children with disabilities often include special needs trusts in their estate plans long before the child reaches adulthood. This helps ensure that future inheritances or gifts do not accidentally disqualify the child from public assistance.

Waiting too long to address these issues can create complications, so the best course of action is to seek help from an attorney as soon as possible. Our team is here to help you navigate this process.

How Can a Lawyer Help?

Special needs trusts are a specific niche carved out of the larger area of trust law. The reality is that not every attorney has the experience and background to help you manage these trusts, so it’s important to choose carefully when you hire legal counsel.

A Montgomery County special needs trusts lawyer can help with the following:

• Determining which type of trust is appropriate
• Drafting trust documents that comply with federal and Pennsylvania law
• Coordinating the trust with a broader estate plan
• Advising trustees about proper administration
• Helping preserve SSI and Medicaid eligibility
• Structuring inheritances and financial gifts properly

Talk to a Montgomery County Special Needs Trusts Attorney Today

Considering a special needs trust? Klenk Law is here to help. Our team understands how to draft your trust documents to protect your loved one now and in the future. Reach out to a Montgomery County special needs trusts attorney today to learn more.

Frequently Asked Questions

Can a special needs trust protect SSI and Medicaid benefits?

Yes. When properly structured, a special needs trust can preserve eligibility for means-tested government benefits.

Who manages the trust?

The trust is managed by a trustee, who controls distributions and ensures the trust complies with applicable rules.

Can family members contribute to the trust?

Yes. Family members often contribute gifts or leave inheritances to third-party special needs trusts.

What can trust funds be used for?

Funds may generally be used for supplemental needs such as therapy, education, transportation, and recreation.

Does every person with disabilities need a special needs trust?

Not always. The need for a trust depends on the person’s financial situation, benefit eligibility, and long-term planning goals.