Government payments can cover much of a disable person’s expenses. In order to qualify for them, individuals cannot have assets in their own names that exceed a certain amount.
A supplemental needs trust allows parents or third parties to provide funds to pay for certain expenses that enhance a disabled person’s quality of life – from residential treatment programs to movie tickets or haircuts – while not cutting off access to government benefits, such as Medicaid or Supplemental Security Income. A special needs trust is similar, except it is created with assets that belong to the individual with a disability.
Funds transferred to a trust are not considered to be assets of the special-needs individual, as long as there is an independent trustee who controls distributions of the money. A trust also insures that a qualified individual will be watching over the money which can be an advantage, since many disabled individuals are not able to manage money on their own.
There are other steps families with special needs can take. Parents may want to create a power of attorney or guardianship for finances and health care, naming themselves as the child’s agent or guardian when the child turns 18. Without this, parents of special-needs children over age 18 may not be able to get access to their child’s medical records or financial records to make decisions concerning health care or finances.
A lawyer should be consulted to prepare a special needs trust, power of attorney, or a guardianship.