Cumberland Trust

Why Create A Special Needs Trust?

Every parent worries. But for those who have children with special needs—mental or physical disabilities—the concerns multiply. Nowhere is fear more palpable, however, than when considering what life looks like for the child after the parent’s death.

Estate planning is essential for any parent with minor children, but for the parent of a special needs child, no simple estate plan will suffice. Routine preparation is not enough since any inheritance left to that child can have devastating, unintended consequences.

A traditional trust can be an excellent way of passing assets to another generation without the expenses and issues associated with probate. It can protect assets from creditors, lawsuits and divorce settlements in the future. But for those with a special needs child, a traditional trust may not be the best solution.

For children with special needs, government aid can be crucial, especially when medical assistance is required. In Tennessee, as in several other states, a person receiving SSI (Supplemental Security Income) also qualifies for Medicaid, which can provide long-term nursing care.

While SSI pays a meager $674 per month on average according to the Social Security Administration, access to Medicaid services can add up to millions of dollars over a lifetime. Maintaining access to vital Medicaid services is critical to the person with special needs who likely will find private insurance extremely expensive.

In determining eligibility for SSI and Medicaid, the government assesses the person’s resources. In any given month, he or she may have no more than $2,000 in what the government terms a “countable resource.” Even exceeding this figure by a few cents can endanger the benefits. If the person is married, the amount for “countable resources” is increased to $3,000.

A special needs trust can be a valuable tool to ensure that the disabled child remains qualified to receive government benefits while continuing to enjoy quality of life. A special needs trust is created solely for the purpose of filling the gap left by government benefits. It is not to be used to sustain basic needs, but to supplement a current lifestyle. In essence, it provides for care above what the government offers.

A special needs trust ensures that the parent’s care and concern will continue long after his or her death. At Cumberland Trust, we serve as trustee for special needs and supplemental needs trusts. By teaming with us to craft a special needs trust you can help secure the future for your special needs family member.

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