A standard Living Trust or Family Trust is useful to manage a child’s inheritance until that child is old enough and mature enough to receive the inheritance.
But what happens when the heir has physical or mental disabilities that would entitle him to receive state or federal benefits? In that case, the use of standard trust provisions will enable the government to trim or even eliminate the benefits that would otherwise be provided for that heir.
To avoid this cutback, many parents in Idaho choose to use a Special Needs Trust. Or they can add Special Needs provisions to a standard Living Trust. Doing so allows assets to be available to supplement the governmental benefits in terms of taking care of the needs of that child. And it does so without enabling the government to cut back on the benefits provided to or for that child.
So how does a Special Needs Trust differ from a standard Living Trust? Really there is just one difference. The trustee of the trust is given absolute and ongoing authority in deciding whether or not to actually use trust assets to take care of the needs of the disabled child.
The Living Trust set up by the parents will make it clear that the trust is established to provide for the support, care, maintenance, and education of the child. But then the trustee will expressly be given absolute discretion to decide which of the needs of the child will be paid for out of the trust.
The trustee will, of course, follow the instructions of the parents and use the trust assets to take care of the child as he or she grows up. But the mere existence of the trustee’s discretion will ensure that the child’s government benefits will not be trimmed due to the existence of the trust. The trust effectively becomes a supplemental source from which the parents can maximize the resources available for the care of their disabled child.
Typically, when the disabled child passes away, any assets remaining in the Special Needs Trust will then be distributed to other heirs designated by the parents when they set up the trust. That can include surviving siblings of the deceased child, charities, or other family members or friends.
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Testimonials
We were both very pleased with your services. You were professional in every way. We found you to be forthcoming and honest about what a trust may or may not be able to do in the future. You gathered our information effectively and prepared our documents timely. During our final meeting you presented our documentation in an organized and efficient manner, and clearly communicated the necessary steps to complete the trust. Thank you for your time and your work on our trust. (Don and Lih S., Boise, Idaho)
