Creating a Special Needs Trust? Here are the costs, what you need to know and which to use


  • Families with loved ones with special needs should protect as many assets as possible to ensure life-saving government financial assistance is not lost.
  • Special needs trusts are designed for this and are ideal for both types: first-party and third-party.
  • Parents should work with experienced attorneys for special needs planning, particularly because profanity can disqualify a trust.

Experts say that special needs foundations are essential to the well-being of a person with special needs.

Certified Financial Planner Mike Walther, Founder of Oak Wealth, said: “The number one reason for special needs trust is that people with special needs are often unable to make appropriate financial decisions for themselves and/or are at risk of being financially exploited by others. Huh.” Counselor in Northbrook, Illinois.

Equally important, according to Charles Italiano, associate director of the Westchester Disabled on the Move in Yonkers, New York, is “eligibility for public services such as [Supplemental Security Income] and Medicaid and enable children with special needs to lead fulfilling lives.”

Here’s a look at other stories that provide a financial outlook on key life stages.

Why do many people with special needs have to live on state aid?

Because the cost of care can be astronomical, said Michael Beloff, Partner and Licensed Special Needs Advisor with Belvedere Wealth Partners in Stamford, Connecticut.

For example, day care services for a severely disabled person can cost more than $100,000 a year, while a group home in the Northeast can cost anywhere from $140,000 to $300,000 a year, he said.

“Depending on the nature of the loss of the individual, most families cannot afford to spend these services out of pocket during their lifetime and after their passing,” he said. “This is where Medicaid comes in.”

Because SSI and Medicaid recipients are allowed limited income and only $2,000 in cash, it is imperative that families place assets in special needs trusts to ensure their loved ones receive this life-saving financial assistance from the government . don’t lose

Walther said special needs trusts should be designed as soon as a child is diagnosed with special needs.

two kinds of trust

There are two types of special needs trusts. Ideally, according to Italiano, you need both.

• third party: “This type of trust is funded with the parents’ money, only for the needy child, and will never be in the child’s name,” Italiano said. “Upon the death of the parent, the estate goes to someone other than the child.”

Beloff said these are often insured and funded with money from parents’ estates and can be set up without money.

Once funded, the trust will have its own tax identification number and will be required to file its own tax return. These funds are intended to cover expenses not covered by Medicaid or SSI, such as B. travel, clothing, computers, etc.

“It’s a way of making sure the money is there and overseen by a qualified trustee, e.g. B. a family member, a friend, or an outside party like a bank or nonprofit organization,” Beloff said. “Be aware of conflicts of interest when the trustee is also the ultimate beneficiary.”

Ray Falcon, chief counsel for the Falcon Law Group in Woodcliff Lake, New Jersey, said it’s important to let other family members know if they should make gifts or bequests to the trust in order to avoid adversely affecting a particular child’s eligibility for Medicaid avoid . Can you

• First Party or First Plaintiff: This trust is created with the individual’s own assets to protect any income, whether earned or inherited, from exceeding Medicaid income and asset limits. The distribution must be approved by the trustee, Italiano explained.

“This type of trust may have a payback provision such that any funds remaining after each pass is used to pay for accumulated Medicaid expenses,” he said.

cooperation with lawyers

The cost of setting up a special needs trust varies in different parts of the US, but can range from $2,000 to $6,000 depending on the complexity of processing a typical estate plan.

Walther said parents should work with experienced attorneys for special needs planning, particularly because swear words can disqualify trust.

Falcon recommended questions for the attorneys concerned. “You should ask a prospective attorney, ‘How many trusts have you written?’ and ‘Have your trusts been reviewed and approved by Social Security and Medicaid in my state?’”

Reputable sources for finding specialist attorneys and planners include the Academy of Special Needs Planners and the Special Needs Alliance.



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