Would You Like A Will With That Special Needs Trust?

Several parents have contacted me recently about setting up stand-alone special needs trust for their children. Unlike a supplemental needs trust that is created in a Will and funded at death, a stand-alone special needs trust is established during one’s lifetime and funded immediately.

Clients are often prompted to establish a stand-alone trust because relatives and friends want to give gifts to their child with special needs but know that an outright gift may jeopardize the child’s eligibility for means-tested government programs such as SSI or Medicaid. A stand-alone trust can be written to accept gifts and bequests from parents, grandparents, siblings and other family members while preserving the child’s eligibility for government benefits.

But creating a stand-alone special needs trust is not a substitute for having a Will. Without a Will directing that your assets be distributed to the supplemental needs trust at your death, your property will likely be passed directly to your child through the intestacy statutes. To protect your child’s benefits, it is absolutely essential that you have a Will that diverts the property that your child will inherit from you to the trust.

A stand-alone special needs trust will allow family members and friends to contribute gifts and bequests to the trust for the benefit of your child. But if you do not have a will that diverts your assets to the trust, it will not accomplish your long-term goal of preserving your child’s eligibility for means-tested programs.