Estate and Trusts
Special Needs Trusts
Special Needs Trusts are used primarily as a means of preserving assets for the benefit of a disabled family member without disqualifying him or her from receiving benefits from government programs such as Social Security, Medicaid and local community services.
Can I Leave Funds Directly to my Special Needs Child?
Bequeathing funds to a disabled child’s sibling or close relative with the intent that the money will be used for the special needs child is not a prudent move.
- The funds may be subject to the claims of creditors or divorce settlements against the relative.
- If the relative predeceases the special needs child, the funds would go to the relatives’ heirs
- The relative to whom the funds are entrusted may be in a higher tax bracket than the disabled child or trust
- The relative is not legally bound to use the funds for the special needs child
Funding a Special Needs Trust
A Special Needs Trust can be funded through a will or gifts from relatives and friends made directly to the Special Needs Trust. Many Special Needs Trusts are funded by “second-to-die” life insurance policies which pay out upon the passing of the second parent. If your disabled relative receives a settlement from a lawsuit, a Special Needs Trust should be established ahead of time to avoid losing Medicaid eligibility. We work with many elder law attorneys who specialize in this field and can refer you to an appropriate one.
Services provided to Special Needs Trusts
Urbach & Avraham provides the following services to the families and trustees of Special Needs Trusts:
- Consulting on allowed expenses
- Income taxation- Preparation of Fiduciary Income Tax Returns (Form 1041)
- Preparation of Formal and Informal Accountings
- Investment advice to comply with Prudent Investment Act
- Reconstruction of Records
Please call for a free consultation to see how we can assist you to provide for your special needs child.