Special Needs Trust Lawyer

When a loved one has special needs such as a mental or physical disability, they often require additional care and assistance. Those needs may increase as time goes by.

Their condition may qualify them to receive government benefits such as Medicaid or Supplemental Security Income, but these programs have strict income and asset limitations. If you try to give them resources or if they receive a settlement or inheritance, they could lose eligibility for these benefits.

If instead, however, the resources are placed in a special needs trust, then a loved one with special needs can still receive benefits for which they are eligible. The trust documents must be drawn up to comply with federal requirements as well as Iowa rules. In addition, the trustee will need to manage the trust in accordance with requirements.

The Huizenga Law Firm, P.C. can help you establish and maintain a special needs trust to ensure that your loved one will be properly provided for in the future.

Different Types of Special Needs Trusts

Depending on the source of the funds and other factors, an estate planning attorney might recommend the use of different types of special needs trusts. For instance, if an individual with special needs receives money from a personal injury lawsuit or inheritance, the trust established with those funds would be a first party special needs trust such as a Medical Assistance Special Needs Trust. If instead the money is provided by a family member such as a parent, then the trust would be a third party special needs trust such as a Supplemental Needs Trust.

How Trusts Operate

A trust is a legal entity that holds property for the use of one or more people known as beneficiaries. The person who funds the trust is the grantor, so in a first party special needs trust, the grantor is also the beneficiary (although the trust must be created by the court or another party). In a third party trust, the grantor is the parent or other person who creates the trust for their loved one.

In both types of trusts, assets are managed and distributed by a person or organization serving as trustee. The trustee is responsible for ensuring that all rules are followed precisely, so people often choose to have a professional take on that role.

A special needs trust is set up as in irrevocable trust, which means that once property is transferred into the trust, it cannot be taken out by the grantor but only distributed by the trustee in accordance with trust terms. Since the property in the trust no longer belongs to the grantor, it is not counted against them for eligibility purposes and cannot generally be reached by creditors.

Supplemental Needs Trusts vs. Medical Assistance Special Needs Trusts

A Supplemental Needs Trust should be set up so that the trustee has discretion regarding the use of funds and is only permitted to distribute funds for certain purposes. Because the trustee has this discretion and the funds did not ever belong to the beneficiary, Medicaid or other creditors have no claim on the assets.

With a Medical Assistance Special Needs Trust, the State of Iowa must be made the residual beneficiary of the trust. That means any funds remaining after the beneficiary passes away would go to the State to reimburse the government for benefits provided.

Let the Huizenga Law Firm Create the Right Special Needs Trust for Your Loved One

If you want to provide for a loved one with a special needs trust, you can establish a trust now or create a testamentary trust in your will that will spring into action when you pass away. Creating a trust in advance can ensure that your loved one receives resources if you become incapacitated.

The experienced team at the Huizenga Law Firm, P.C. can review all the options and help you develop the best trust to meet your family’s needs. Just schedule a consultation to get started.