Forming a special needs trust is a great way to protect and help secure the financial integrity of vulnerable people who have special needs. If you are a conservator who is in charge of a person with disabilities, a special needs trust may be a good way to plan for his or her financial future.
What is a Special Needs Trust?
The primary function of a special needs trust is to hold and spend the assets of a person with disabilities without it impacting the Social Security, medical and other public assistance benefits that they receive.
Rules by the Social Security Administration (SSA) dictate that a person may not possess more than $3,000 (each situation is unique, so check with your attorney or the appropriate agency on the set amount) in countable assets in order to receive public assistance. By forming a special needs trust, a beneficiary will be able to maintain the assets that they have without having to liquidate them in order to qualify for medical assistance or other programs. This is because the beneficiary does not actually hold or have possession of the assets, they technically belong to the trust.
The Details Matter
The specific details of a special needs trust generally dictate what the trust can be used to pay for. Beneficiaries should work with their attorneys to create a special needs trust that does not interfere with or reduce the benefits they receive from social security and similar programs.
Consult with your attorney to understand the specific guidelines your state
(particularly its Medicaid program) has that govern special needs trusts as well those of the SSA.
How is it Different From Conservatorship?
Although a special needs trust is similar to a conservatorship, there are some key difference that set the two apart. A conservator is someone who is given power by the courts to manage the finances and day-to-day decisions — from deciding on housing and education to signing contracts, etc. — that a person may need to make. Conservator are tasked with managing a protected person’s assets but there are strings attached with how the funds may be spent. The court can also grant conservators other specific powers.
Protection Through Surety Bonds
Whether you are looking to form a conservatorship or a special needs trust, getting the respective bond will help ensure that the assets inherited by a beneficiary with disabilities are not mismanaged, stolen or subject to fraud. In some cases, these types of fiduciary bonds may even be mandated by the courts in your state. To learn more about the bonds that you need, contact The Patrick J. Thomas Agency today.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.