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Special Needs Planning without Special Needs Trusts

A substantial portion of our practice involves helping parents plan for an unclear future for their child with special needs.

  • What sorts of resources will be there when I’m not?
  • Who will take care of my child when I can’t?
  • Will my child need Guardianship or Powers of Attorney?
  • Do I need to create a Special Needs Trust?
  • Will my child qualify for SSI and Medicaid?
  • Will my child NEED SSI and Medicaid?

All extremely common questions that most parents have when they are just starting their special needs planning.

Do I Need to Create a Special Needs Trust?

Children who have special needs is a much larger segment of the population than children who need special needs trusts. You may be thinking, “but don’t all special needs kids need a special needs trust?” No, not necessarily.

Special Needs Trusts are vitally important for children who 1) Are currently eligible, or will likely be eligible in the future, for public means-tested benefits like SSI and Medicaid, and 2) need to preserve those public means-tested benefits in the event of an inheritance from parents or other loved ones. If one or both of those elements are missing, a Special Needs Trust may not be a good planning strategy for your family. But, just because the Special Needs Trust may not be the right strategy, doesn’t mean your family doesn’t need additional planning.

Discretionary Support Trusts

Even if a child is not legally disabled, according to SSA regulations, they may not be capable of managing their own financial affairs. Putting someone else in control of supporting the child’s needs with inherited assets can be a crucial part of your special needs planning strategy.

Many children with I/DD, for example, may never qualify for SSI and Medicaid, but will never likely be able to take care of themselves without help. In this case, we use what’s called a Discretionary Support Trust, also known as an Asset Protection Trust, to provide for supplemental support to the child, likely until the child passes away, without the additional regulatory restrictions of a Special Needs Trust. This trust allows a trustee to hold assets for the child’s benefit, but also allows degrees of flexibility that Special Needs Trusts would never allow – like payments for health care needs, and direct (yet small) distributions to the beneficiary for discretionary spending (if appropriate).

While Special Needs Trusts are still incredibly useful, they’re not right for everyone. Discretionary Support Trusts may the right choice based on your specific needs.

Author Bio

Paul Yokabitus

Paul Yokabitus is the CEO and Managing Partner of Cary Estate Planning, a Cary, NC, estate planning law firm. With years of experience in estate and elder law, he has zealously represented clients in various legal matters, including estate planning, guardianship, Medicaid planning, estate administration, and other cases.

Paul received his Juris Doctor from the Campbell University School of Law and is a North Carolina Bar Association member. He has received numerous accolades for his work, including being named among the “Best Attorney in Cary” in 2016 and 2017 by Cary News and Rising Star in 2020-2023 by Super Lawyers.

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