Getting the Most for Those Who Need It Most

Amidst rising healthcare costs and rigid public-aid requirements, special-needs trusts can enrich the lives of your disabled loved ones. Here’s the lowdown on what you need to know.

The facts and figures are staggering: nearly 54-million people in America cope with special needs and the rising expenses related to some form of disability—whether cognitive, developmental or physical—according to the National Organization on Disability. The rise in cases of certain disabilities may be on the verge of creating a national health crisis. Autism, for one, drains the economy of  $35 billion a year according to a recent Harvard School of Public Health study. The Harvard research also indicates that the lifelong bill for one autistic individual, from birth until death, could reach as much as $3.2 million. What’s more, individuals with special needs relying on government assistance alone—such as Medicaid and Supplemental Security Income—often live near the poverty level in the absence of additional income from their family, community or other loved ones.

Despite these alarming numbers, once a disability is diagnosed, early planning helps families add to and protect the assets of a special-needs individual, preventing the loss of critical benefits. One effective way to protect a loved one is through a special-needs trust. “It’s the most popular planning tool,” according to Vincent J. Russo, cofounder of the Academy of Special Needs Planners and a special-needs estate attorney.

To Preserve and Protect

Special-needs trusts were created to manage resources while protecting an individual’s eligibility for vital public assistance. Establishing an SNT may also prevent court intervention by eliminating the need to appoint a guardian to manage the disabled individual’s assets. SNTs are designed to pay for items—such as education, alternative therapies, counseling and vacations—which go beyond the simple life expenses covered by government benefits.

There are two basic types of SNTs: the third-party special-needs trust and the first-party special-needs trust. Third-party SNTs commonly are created by a parent or other family member for a child with special needs—though the child may be an adult when the trust is created or funded. These SNTs require no government paybacks and allow the beneficiary to receive gifts, lawsuit settlements or other funds without losing their eligibility for certain government programs.

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