Special Needs Trusts: Overview and Benefits

By Ann Ramage, CPA, Partner

Special Needs Trusts: Overview and Benefits

How a Special Needs Trust can help a loved one living with disabilities

If you’re the parent or guardian of someone living with disabilities, you are likely relied upon for meeting most of their immediate needs like medical, social, emotional, and financial. But what about long-term welfare? Careful decision making is crucial to ensure that the person living with the disability is able to preserve government benefits and maintain cash-flow as well as quality of life in the future.

A Special Needs Trust (SNT) is a financial solution that parents and guardians can use to address the long-term needs of their disabled loved one. A SNT is a legal arrangement that ensures assets are held in an account and used to support a person living with a disability. Assets placed in the SNT can include money, a life insurance policy, or a court settlement.

Preserving state and federal benefits

A person living with a disability may become ineligible for state and federal benefits, including Medicaid, supplemental Social Security income, if their income exceeds certain thresholds. However, if the income is placed in an SNT, the funds belong to the trust not the disabled person, so they are not factored into the person’s government benefits eligibility. This is the most important feature of the SNT.

Maintaining cash-flow for the long-term

The trustee will select a professional investment advisor to manage the assets in the SNT. It is important to select an advisor that is experienced in structuring the assets to ensure the trust generates enough growth to sustain the necessary funds for the long term.

Supporting quality of life

SNT assets can only be used as a supplement to government programs and to support quality of life for the disabled person. For example, the proceeds can be used for activities and services like education, recreation, custom living arrangements, companionship, etc. The trust resources can also be used for new medical treatments not covered by government benefits.

Does a Special Needs Trust sound like a good option for the long-term financial needs of your loved one? Plan carefully. There are many factors involved in setting up the trust including legal, investment, and tax considerations. It is important to seek guidance from your trusted advisors. Questions for your unique situation? Contact your Keiter Opportunity Advisor.

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About the Author

Ann Ramage

Ann Ramage, CPA, Partner

Ann has 20 years of experience providing tax planning opportunities and insights to operating entities, investment partnerships, trusts and high wealth individuals and families. Ann is a member of Keiter’s Family, Executive, and Entrepreneur Advisory Services team and works closely with individuals and family offices to address their various tax compliance, consulting and estate planning needs.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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