Protecting Assets for Children or Beneficiaries with Special Needs

Protecting assets for children or beneficiaries with special needs is a critical consideration in estate planning. Special needs individuals may rely on government benefits and assistance programs, so it’s essential to structure your estate plan in a way that doesn’t jeopardize their eligibility while providing for their financial well-being. Here are several strategies to achieve this:

Special Needs Trust (SNT)

A Special Needs Trust (also known as a Supplemental Needs Trust) is the primary tool for protecting assets for individuals with special needs.

It allows you to set aside funds for the beneficiary’s benefit without disqualifying them from means-tested government benefits like Medicaid and Supplemental Security Income (SSI).

The trust is managed by a trustee who can use the assets to enhance the beneficiary’s quality of life, such as paying for medical expenses, therapy, education, or recreational activities.

Third-Party Special Needs Trust

Family members, such as parents or grandparents, typically establish third-party SNTs for the benefit of a loved one with special needs.

These trusts can be funded during the grantor’s lifetime or through their will or revocable living trust after their death.

First-Party Special Needs Trust (d4A Trust)

If the beneficiary with special needs comes into an unexpected inheritance or settlement, a first-party SNT can be established to hold those funds.

This type of trust must adhere to specific legal requirements and may be subject to Medicaid payback provisions upon the beneficiary’s passing.

Pooled Trust

A Pooled Trust is a type of SNT that is managed by a non-profit organization. Funds from multiple families are pooled and managed collectively.

Each beneficiary has a separate account within the trust, allowing for individualized distributions while still protecting benefits eligibility.

Life Insurance

Life insurance can be a valuable asset protection tool when planning for a special needs beneficiary.

The death benefit from a life insurance policy can be directed to the SNT, providing a source of funding to support the beneficiary’s needs.

Carefully Drafted Will or Trust

Ensure that your will or revocable living trust includes provisions to create a Special Needs Trust upon your death for the benefit of the individual with special needs.

Appoint a qualified trustee who understands the beneficiary’s unique needs and has experience managing SNTs.

Consult an Experienced Washington Special Needs Attorney

Special needs planning can be complex, and it’s crucial to consult with an attorney experienced in this area of law. Gregorek & Associates can help you navigate the legal requirements, structure the trust appropriately, and provide guidance on funding and ongoing administration. Call our office at 425-284-3450 or fill out our contact form and we will be in touch to schedule a meeting.