ESTATES AND TRUSTS: Special Needs Planning

For some, a legacy includes the gift of providing extended care and financial security for a loved one with special needs. Our experience in practicing law in this area helps us answer the most common concerns we hear from our clients.

Can, or should, my loved one receive social security, Medicaid or other government benefits—even If I have enough assets?
Often the answer is, yes. Whether you currently have enough assets or not, it's advisable to plan for any unforeseeable events and take the necessary steps now to avoid jeopardizing the availability of those programs and services in the future. There are qualifying requirements for many of the programs available to support and care for individuals with disabilities. Our attorneys are experienced in helping families accomplish the necessary registration and initiation of services and benefits.

What do these federal services and benefits cover?
State administration of the federal programs vary, but in Illinois for example, individuals qualifying to receive federal Medicaid assistance are provided with services including,

• Health care
• Assisted living environments
• Case management services and
• Sheltered or supported employment arrangements. Even if an individual with disabilities is not in need of those services immediately, it's advisable to work with an attorney to plan for future contingencies.

How do I ensure that my child or loved one is taken care of when I am gone? How can I provide for my child or loved one after my passing?
With careful and prudent advance planning, you can ensure the future of your child or loved one, without disqualification from any government benefits to which he or she is entitled. Our attorneys are sensitive and knowledgeable about the "how and when" of federal assistance provisions as well as the creation and administration of specific legal special needs trusts that provide for the future needs of loved ones in these circumstances.

What are Special Needs Trusts?
There are two forms of special needs trusts that provide for the care and treatment of individuals with disabilities, generally after the death of parents, grandparents or other responsible familial caretakers.

• The Third Party Special Needs Trust, which is created upon the transfer of assets to a trust for the benefit of the individual with a disability by anyone or any entity. No assets held in the disabled individual's name may be placed in the trust. Properly drafted and administered, this type of trust will not disqualify the beneficiary from receiving Medicaid or Social Security. Trust assets are considered "exempt assets" that may be used to supplement social security and Medicaid to improve the beneficiary's standard of living. The beneficiary of the Third Party Special Needs Trust may not have any right to demand any funds from the trust, and it can only be used to provide services that the government does not provide, such as transportation, enhanced care, better facilities, more rehabilitation, entertainment and travel. The primary benefit of a Third Party Special Needs Trust is that, upon the beneficiary's death, any assets remaining may be distributed to beneficiaries named by the person who created the trust. A Third Party Special Needs Trust can be part of a parent or grandparent's will, to come into effect upon the death of the creator and funded with assets from the creator's estate. It can also be a stand-alone trust effective on the date it is created.
• The OBRA Self-Settled Trusts. These trusts are similar to a Third Party Special Needs Trust in that an OBRA Trust is also considered an exempt asset when qualifying for Medicaid and Social Security, assets are to be used to supplement federal benefits provided to the beneficiary and the beneficiary cannot have any right to demand any assets or distributions from the OBRA Trust. However, an OBRA trust is created with the assets of the person with a disability and cannot be created after the beneficiary turns 65. Only a parent, grandparent, legal guardian or court may establish an OBRA trust for a person with a disability. The primary disadvantage is that, upon the death of the beneficiary, any assets remaining in an OBRA Trust must be paid to the State to reimburse the State for medical aid the beneficiary receives during his or her life. For this reason, a Third Party Special Needs Trust is generally preferable over an OBRA Trust, but consultation with an attorney knowledgeable in this area of the law is recommended.