What happens when I die? This is the greatest fear of any parent whose son or daughter has a disability. Planning for the unthinkable allows you to take control of your child's emotional and financial security. It will give you peace of mind to know that he/she will be cared for in the way you intended through a Special Needs Trust.

SPECIAL NEEDS TRUST CAN BOOST QUALITY OF LIFE
An article by: Attorneys David H. Ferber and Edward D. Beasley
ARTICLE OF INTEREST

All young parents wonder how their children will be cared for in the event the parents die prematurely. This fear dissipates as the children age and become more independent. For the parents of a child with disabilities, however, the fear never goes away. What will happen to the child with Down's Syndrome, muscular dystrophy, MS, or other serious disability? How will they be cared for after the death of their parents?

Our society has developed programs that provide basic food, shelter and medical care, such as Supplemental Security Income (SSI) and Medicaid. Where we have fallen woefully short, however, is in the provision of amenities, or "extras," that will enhance the quality of life.

Who will provide the trips, the music, the Christmas presents, the extra warm winter coat, or the clothes that are stylish, instead of merely practical? Who will take the child out to dinner on his birthday? For the child with disabilities, especially one who does not live with his family, these are the things that can make life special.

Most parents wish to provide equally for their children, and simply give the child with disabilities his share of the estate. This type of direct gift, however, will not provide the child with the special things he needs, but will have the opposite effect. If such a child receives an outright gift through a will or a trust, the child will lose eligibility for most public benefits programs.

Since the child now has assets of his own, he will no longer be eligible for SSI, Medicaid, and other public programs. The inheritance will have to be "spent down" on basic food, shelter and medical care until there is nothing left. When the inheritance has been exhausted, the child will become eligible for public benefits once again. Clearly, such an inheritance will have been wasted, since the money did not contribute to the child's quality of life.

The solution to this dilemma is for the parents to make a trust known as a "special needs trust." A special needs trust allows money to be used to supplement government programs, but not to take their place. Money set aside in a special needs trust does not have to be spent down on basic care. Rather, the money is used to provide the "extras" that children with disabilities so desperately need, and that government assistance does not provide.

The basic idea behind a special needs trust is that the trustee is given discretion to use the money to provide the amenities that enhance the child's quality of life, and is prohibited from using the money for basic food, shelter and medical care that the government provides.

Usually, a brother or sister of the special needs child acts as trustee. Recognizing that these persons may not have experience in using money to care for their disabled brother or sister, the trust can provide detailed instructions or suggestions as to use of the money. For example, the trust can suggest that the trustee visit the beneficiary periodically, speak with his counselors, arrange for extra medical care, and evaluate his recreation and leisure needs. The trustee can also hire social workers and therapists with experience in the disability in question. The trust also needs to contain a provision safeguarding the money from the beneficiary's creditors, and a provision stating where the money is to go on the death of the beneficiary.

For cases in which a brother or sister is not an appropriate trustee, parents may be able to take advantage of the "pooled trust" concept. With a pooled trust, a charitable organization acts as trustee, "pooling" contributions for many families.

In addition to providing for children with disabilities, a special needs trust can be used to help individuals who have received personal injury awards. The award is placed into a special needs trust, and is used to provide amenities of life. Without a trust, the personal injury award would have the same effect as an inheritance; i.e., it would disqualify a person from benefits.

In order to protect eligibility for benefits in the personal injury context, however, the trust has to follow some very technical and specialized rules recently enacted by Congress.

With a special needs trust, there is no reason a person with disabilities cannot enjoy an inheritance, just like his brothers and sisters.