How To Form A Special Needs Trust During Your Lifetime

From Our “Ask a Question” mailbag, How To Form a Special Needs Trust During Your Lifetime:

Special Needs Planning Attorney, Peter L. Klenk

“Can I form a Special Needs Trust during my lifetime?  I would like to put some money aside for my Special Needs son now.  But I don’t want to disqualify him from his Medicaid.”

You May Form a Special Needs Trust During Your Lifetime.

You may indeed form a Special Needs Trust during your lifetime.  These trusts are called Inter Vivos Trusts, meaning “during life.”  Most people can only afford to set up a Special Needs Trust in their Will.  They use their estate to fund the trust at death.  If you have the resources to form an Inter Vivos Special Needs Trust during your lifetime, it means that you are comfortable no longer owning these assets during your life. Once you have funded this Trust, the assets are no longer yours.

Third Party Special Needs Trusts.

A Special Needs Trust you form during your lifetime is called a Third Party Special Needs Trust.  A Third Party Trust differs from a First Party Special Needs Trusts, created for or by the Special Needs Person using his assets.

The Special Needs Trust must have some specific terms. Beyond these terms, you have flexibility.  You can select the trustee.  The trustee can be a family member or a professional.  You can also name a Protector.  The Protector has the power to remove and replace the trustee without involving the court.  Serving as a Protector rather than trustee allows a family member to watch over your son without being personally responsible for the trust assets.

I suggest that we speak about your particular situation.  The Trust’s terms can be crafted to address specific assets and your son’s particular situation.  For example, you have flexibility in deciding what happens to the remaining Trust assets at your child’s death.

The Special Needs Trust Must Contain Certain Terms but Can Be Flexible Others.

I suggest that we speak about your particular situation to craft a Third Party Special Needs Trust that addresses both your son’s and your needs.

Contact our office for a free consultation if you have further questions about Special Needs Trusts or any other Estate Planning issues.  I hope this Post has helped you understand how to form a Special Needs Trust during your lifetime.  Comments and suggestions are welcome!

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Author, Peter Klenk, Esq.