• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Raleigh Estate Planning and Corporate Law Attorneys

  • ABOUT US
  • Attorneys
    • Lesley W. Bennett
    • Frances M. Clement
    • Scott H. Dunnagan
    • Reginald B. Gillespie, Jr.
    • Michael A. Ostrander
    • Daniel C. Pope, Jr.
    • Kristine L. Prati
    • James E. R. Ratledge
    • Toler W. Ratledge
    • Paul F. Toland
    • Thomas J. Wilson
  • Practice Areas
    • Business Law
      • Business Startup
      • Business Operation
      • Mergers And Acquisitions
      • Exit Strategy / Succession Planning
      • Professional Practice Representation
    • Civil Litigation
    • Estate Planning and Trusts
      • Estate Planning and Asset Preservation
      • Estate and Trust Administration
      • Estate and Trust Disputes and Litigation
      • Special Needs Trusts
      • Medicaid Planning
      • Elder Law
    • Tax Issues
      • Tax Planning
      • Tax Controversy and Litigation
    • Commercial Bankruptcy Litigation
    • Government Defense
    • Real Estate, Development & Land Use
    • Workers’ Compensation Defense
  • Blog
  • Resources
  • CONTACT US
    • Raleigh, North Carolina
    • Boca Raton, Florida
  • 919-787-7711

Special Needs

What Is A Special Needs Trust, and How Do I Know if I Need One?

June 5, 2020 By wrlaw

If a loved one is disabled, elderly, or otherwise unable to manage his finances, what can you do to help? These individuals often turn to state or federal assistance programs to cover their basic living expenses. However, there are often expenses that public benefit programs do not cover. Further, these programs have strict qualification limits. As such, if your loved one comes into money due to a family death or other life event, it could cost him his much-needed public assistance benefits.

Fortunately, the law supplies a remedy in the form of special needs trusts. Here, we will explain what this type of trust is, how it works, and why it is necessary.

What Is A Special Needs Trust?

At its most basic level, a trust is a legal instrument designed for the safekeeping of assets. Assets like cash, investments, or property can be held in a trust until a specific time or condition warrants distribution. A trustee – the person or entity who is designated to manage the trust – must distribute the assets within the trust in a way that is consistent with the beneficiary’s best interests. This includes authorizing any change to or withdrawal from the trust.

A “special needs trust” or SNT is a specific type of trust that provides a supplemental benefit to a disabled or elderly beneficiary without disqualifying the individual from any public assistance benefits.

How Does A SNT Work?

SNTs are used to fund expenses outside the scope of what is covered by government assistance. The goal is to give the beneficiary access to those things that will enhance the beneficiary’s quality of life. An SNT allows the beneficiary to continue to receive public assistance, while also having a source to fund other goods and services that public assistance does not cover.

By holding the assets of a disabled or elderly individual in an SNT, any increase in assets or income will supplement the beneficiary’s circumstances, rather than potentially disqualifying them from the public assistance programs on which they rely. Many of these individuals depend on programs like Medicaid, Social Security Income, and similar resources to cover basic living expenses. SNTs are intended to fund those expenses outside of the basics that are covered through other means. Furniture, vacations, specialized medical procedures, and sporting equipment are just a few things an SNT can fund.

What Warrants the Use of A SNT?

SNTs were created by federal law to protect Medicaid and SSI recipients. Because public assistance programs impose strict limits regarding assets and income, the SNT keeps the assets of public assistance recipients from barring additional benefits.

For example, if a benefits recipient receives a lawsuit settlement, inheritance, or other monetary gift or award, this change in assets could disqualify him from receiving further benefits. The SNT covers the percentage of the person’s financial needs that public assistance payments do not cover. The assets held within the trust do not count, essentially, to qualify (or bar) the person for public assistance.

In other words, you may gather your loved one’s assets into an SNT to “shield” them from governmental scrutiny, thus effectively allowing your loved one to still qualify for public assistance.

Even if the beneficiary does not currently receive government assistance, an SNT can serve as a supplement to benefit an individual who is unable to manage his finances. Should the beneficiary need to pursue public assistance in the future, the SNT can serve as an immediate resource to fund your loved one’s lifestyle and cover his expenses during the often-lengthy application process for most benefit programs.         

Further, parents of children with special needs can benefit from setting up an SNT, which will ensure that their children have the resources to meet their future needs without risking the ability to receive public assistance benefits. In these cases, the SNT provides a means to pay for goods and services not covered by these benefits. If a parent simply left assets to a disabled child through a standard will, such inheritance could disqualify the child from receiving any government benefits.

How Is A SNT Created?

There are three types of SNTs in North Carolina:

A Self-Settled SNT

The self-settled SNT and the pooled SNT are both funded by the beneficiary’s assets. The name is misleading, however, as a self-settled SNT must be established for the beneficiary’s benefit by a parent, grandparent, legal guardian, or a court and not the beneficiary himself.  

A “Pooled” SNT

Unlike the self-settled trust which is only an option for beneficiaries under the age of sixty-five, the pooled SNT does not have any age restriction and it can pool the resources of many parties, including the beneficiary, to fund it. Pooled SNTs must be managed by a nonprofit association. Medicaid must be reimbursed with any remaining funds in the trust for all self-settled trusts, regardless of the source of the funding.

A Third Party SNT

Finally, third-party SNTs are funded by someone other than the beneficiary. A testamentary trust created by a parent for the benefit of a special needs child to take effect upon the parent’s death is one example of a third-party SNT. These trusts do not have an age restriction and there is no requirement to repay any Medicaid expenses upon the death of the beneficiary.

It’s vital that the person or entity who creates the trust – or its legal representative – crafts the language of the trust carefully to ensure it is valid and will withstand scrutiny. Ideally, the SNT will be created before the beneficiary reaches the age of 65.

Contact Our Experienced Estate Planning Attorneys     

At Wilson Ratledge, our attorneys assist clients in preparing and executing documents that help them remain financially secure and sound. We regularly help clients set up special needs trusts to ensure their family members are sufficiently protected. For assistance, contact one of our experienced North Carolina estate planning attorneys today at 919-787-7711 or via our contact form below. We look forward to serving you.

Special Needs Planning

April 23, 2015 By wrlaw

Families who have a family member with a disability must plan for the future very carefully. How assets are left after your death can have a tremendous impact on the quality of life for that person. In the past, a Will may have been enough, but times have changed. To protect a person with special needs, a well-defined estate plan is vital.

A Special Needs (or “Supplemental Needs”) Trust allows a parent, grandparent, guardian, or other person to provide funds for a disabled child without disrupting the child’s eligibility for government aid. Important points to remember while investigating the use of this estate planning tool are:

  • -Decide on an appropriate guardian for your child
  • -Determine who would be a suitable Trustee(s) to manage the Trust’s assets and supervise your child’s finances
  • -Outline instructions for your child’s education, housing, personal and emotional needs

Wilson Ratledge helps families address the financial, legal and social aspects of a person’s life to develop an effective plan for the future. Our goal is to ensure that their needs are met and that they have the opportunity to expand their horizons and follow their dreams. Some important aspects of Special Needs Trusts are listed below.

WHAT IS A SPECIAL NEEDS TRUST?

A Special Needs Trust is a discretionary, spendthrift trust created for a person who is elderly or disabled as a way to supplement the person’s public benefits. Those public benefits may include SSI, Medicaid, Section 8 Housing and other federally or state-sponsored assistance programs.

WHAT ARE THE ADVANTAGES OF A SPECIAL NEEDS TRUST?

A Special Needs Trust may:

  • Help maintain an individual’s potential eligibility for a group home.
  • Purchase a home for the individual.
  • Pay for services that Medicaid does not cover, including home care and such items as wheelchairs, handicap accessible vans and mechanical beds.
  • Pay for a personal attendant, should that be required.
  • Pay for recreational and cultural experiences.
  • Help enrich the beneficiary’s life

WHAT REQUIREMENTS MUST BE MET WHEN ESTABLISHING A SPECIAL NEEDS TRUST?

There are two key requirements:

  • The trustee must be given absolute control over the distribution of the funds.
  • The person with special needs cannot have the authority to revoke the trust.

SELECTION OF TRUSTEE

Selecting a trustee for a Special Needs Trust is one of the most important steps in the planning process, because the trustee will be empowered to manage the life of the child with special needs.

A special needs trustee should have these characteristics:

  • A long-term commitment.
  • A special sensitivity to the individual’s disabilities.
  • Active involvement in monitoring the client’s services.
  • The ability to be an advocate for medical and financial entitlements.
  • The ability to be a prudent investor and distributor of trust funds.

 

While family members often want to serve as trustee, they typically don’t possess all of the necessary qualifications. For that reason, it is strongly recommended that families retain a professional trustee to oversee the Special Needs Trust, with a family member named as co-trustee.

 

If a family selects a professional trustee from a bank, they should be sure that the bank has a trust department with an excellent track record for managing money. If a family chooses an attorney to serve as the professional trustee, they should be certain that he or she has a good track record in managing trust money, or that he or she will arrange to hire a professional money manager to oversee trust investments.

 

WHAT IS THE ROLE OF A CARE MANAGER?

 

A Special Needs Trust can direct the trustee to hire a care manager. That individual specializes in making the necessary arrangements to provide the special needs individual with the level of care he or she requires. The care manager should have a social work background and related expertise and be knowledgeable about all social service programs available to assist the beneficiary.

 

A good care manager will:

 

  • Monitor the individual’s progress.
  • Ensure that the individual’s needs are met.
  • Coordinate nutrition and cleanliness programs.
  • Make sure that exercise and physical therapy programs are maintained.
  • Coordinate any socialization or psychological counseling.
  • Ensure that the special needs person has assistive devices, if needed.
  • Have a plan and a responsible advocate available to resolve problems in a quick and timely manner in the event of an emergency.

 

Contact Wilson Ratledge today to speak to speak to an attorney about any questions you may have regarding Special Needs Planning.

Are You Prepared For Mental Incapacity?

April 1, 2015 By wrlaw

A power of attorney enables you to select who it is that you would want to handle your affairs in the event of your incapacity, as opposed to having the court decide this for you.  There are two types of power of attorney in North Carolina, a Durable Power of Attorney and a Health-Care Power of Attorney.

Durable Power of Attorney

The primary purpose of a Durable Power of Attorney is to give another person the legal authority to handle your assets on your behalf during your lifetime.  Absent a Durable Power of Attorney, if you become legally incompetent to handle your property, the court would have to appoint someone to act on your behalf in that regard. That person is called a Guardian of the Estate.

Health Care Power of Attorney

The primary purpose of a Health Care Power of Attorney is to give another person the legal authority to make health care decisions for you if you cannot make or communicate your own health care decisions.  Absent a Health Care Power of Attorney, if you are not able to make or communicate your own health care decisions, the court would have to appoint someone to do this for you. That person is called a Guardian of the Person.

If the same individual serves as both Guardian of the Estate and Guardian of the Person, that person is called a General Guardian.

Naming an Attorney-in-Fact and a Health Care Agent before incapacity is a good idea. It can avoid the unpleasantness and expense associated with having to be declared in incompetent by a court, to have a Guardian of the Person and/or Estate appointed and for the Guardian of the Estate to have to file accountings with the Clerk of Court. It can also avoid unpleasant disputes among family members and maybe even others as to who should be appointed by the Court to act on your behalf.

Primary Sidebar

Contact Us

Loading

Recent News

  • NC Court of Appeals Decides First Extended Benefits Case Under N.C. Gen. Stat. §97-29(c)
  • Gun Trusts in North Carolina: What are They and How Can You Set One Up?
  • Tax Hardship: What To Do if You’re Offered an IRS Offer in Compromise
  • Daniel C. Pope’s Collaboration to Aid Ukrainian Refugees
  • How Do You Set Up a Spendthrift Trust in North Carolina?

Footer

Contact Us

Raleigh, NC

4600 Marriott Dr., Suite 400
Raleigh, North Carolina 27612
Phone: 919-787-7711
Fax: 919-787-7710

Boca Raton, FL

33 SE 5th Street #200
Boca Raton, Florida 33432
Phone: (561) 338-4911
Fax: (561) 338-4811

Connect With Us

  • Facebook

Practice Areas

  • Commercial Bankruptcy Litigation
  • Business Law
    • Business Operation
    • Business Startup
    • Exit Strategy / Succession Planning
    • Mergers And Acquisitions
    • Professional Practice Representation
  • Civil Litigation
  • Government Defense
  • Real Estate, Development & Land Use
  • Tax Issues
    • Tax Audits
    • Tax Collections
    • Tax Controversy and Litigation
    • Tax Liens
    • Tax Planning
  • Estate Planning and Trusts
    • Asset Preservation Planning
    • Estate and Trust Administration
    • Estate and Trust Disputes and Litigation
    • Estate Planning and Asset Preservation
    • Special Needs Trusts
    • Medicaid Planning
    • Elder Law
  • Workers’ Compensation Defense

Copyright © 2023 Wilson Ratledge PLLC. · Site by LegalScapes · Privacy Policy · Disclaimer

  • Commercial Bankruptcy Litigation
  • Business Law
  • Civil Litigation
  • Government Defense
  • Real Estate, Development & Land Use
  • Tax Issues
  • Estate Planning and Trusts
  • Workers’ Compensation Defense