Important Steps to Follow When Planning a Special Needs Trust

Posted on: 20 March 2024

Planning a special needs trust is a crucial step in ensuring the long-term financial security and well-being of a loved one with disabilities. This type of trust allows you to provide for their needs without jeopardizing their eligibility for government benefits.

Here are the important steps to follow when planning a special needs trust.

Understand the Basics of Special Needs Trust Planning

Before diving into the planning process, it's essential to have a clear understanding of what a special needs trust is and how it operates. A special needs trust is a legal arrangement that holds and manages assets on behalf of an individual with special needs. These trusts are designed to supplement the beneficiary's government benefits and cover expenses not covered by public assistance programs.

Seek Legal Counsel

Creating a special needs trust involves navigating complex legal and financial matters, so seeking professional advice from an attorney experienced in special needs planning is essential. A knowledgeable attorney can help you understand the legal requirements, draft the trust document, and ensure compliance with state and federal laws governing special needs trusts.

Choose the Right Trustee

Selecting the right trustee is a critical decision when establishing a special needs trust. The trustee will be responsible for managing the trust assets, making distributions, and ensuring compliance with trust terms. It's crucial to choose someone who is trustworthy, financially savvy, and well-versed in the unique needs of individuals with disabilities.

Determine Funding Sources

Common funding sources for special needs trusts include cash, investments, life insurance policies, real estate, and other assets. It's essential to ensure that the trust is adequately funded to meet the beneficiary's long-term needs.

Consider Future Needs and Expenses

When planning a special needs trust, consider the beneficiary's future needs and expenses. This includes housing, medical care, therapies, education, transportation, and other essential services. By taking into account these anticipated costs, you can develop a comprehensive plan to provide for your loved one's needs.

Provide Detailed Instructions

Clearly outlining the beneficiary's needs, preferences, and expectations in the trust document ensures that their wishes are respected and their quality of life is maintained. Providing specific instructions regarding allowable distributions, discretionary expenses, and other provisions will help guide the trustee in managing the trust effectively.

Review and Update Regularly

Life circumstances and financial needs can change over time, so remember to review and update the special needs trust regularly. Periodic reviews with your attorney and trustee will ensure that the trust remains aligned with the beneficiary's current situation and future goals.

Contact a law firm like Elder Law of Nashville to learn more about special needs trusts.