Our Firm Understands Special-Needs Issues

  1. Who are people with special needs?
    • People with physical and/or mental challenges.
    • They often receive government benefits to cover the cost of their care.
  2. What government programs pay for the care of those with special needs?
    Social Security Disability (SSD)
    • Based on how many quarters a person worked and contributed to Social Security.
    • The amount an individual receives is directly related to what the individual earned.
    • There are no asset or income limitations for this program.
    • Must be disabled, according to the Social Security Administration definition.
    Supplemental Security Income (SSI)
    • Provides income for food, clothing and shelter.
    • Based on financial need.
    • SSI benefit amount reduced by receipt of earned and unearned income.
    • Must be disabled, according to the Social Security Administration definition.
    Medical Assistance (MA)
    • Provides medical care, food stamps, rent and heating assistance.
    • Based on financial need.
    • Usually received in conjunction with SSI benefits.
  3. What if a person who is receiving benefits receives extras, like money or gifts?
    The MA and SSI programs are programs that an individual must qualify for financially. Money and other gifts that are given to a person receiving benefits could either reduce the amount of benefits he or she receives or make that person ineligible for benefits.
  4. How can I give someone enough to make their life comfortable?

    By using what is called a special needs trust. This is a special kind of account that holds assets for someone who either can't have many assets in their name or can't manage assets because of a physical or mental challenge.

    Those individuals who, for example, receive personal injury settlements, would fund a trust while they are alive and use the money during their lifetime. This type of trust is funded with the individual's money, so anything left would go back to the state to cover the cost of the benefits they received during their lifetime.

    Those individuals, for example, who wish to leave their children money in a will would fund the trust after they have passed away. This is not considered the child's money, so if the child didn't use all the money in his or her lifetime, there is another beneficiary listed to receive the assets.

  5. How do these special needs trusts work?
    The trust owns the money that is put into it, but there are guidelines about how the money is to be used written into the trust. There is a person whom the money is to be used for, who is called the beneficiary, and there is a trustee, who manages the money, according to the trust guidelines. The trustee does not own the money. Because the trustee has discretion of how the money is to be used, according to the trust document, and the beneficiary cannot take money out directly, the assets are protected while they're in the trust.
  6. Aren't there penalties for putting money into a special needs trust?

    No. An SSI/MA recipient who receives assets that are put into a special needs trust does not actually ever directly receive the assets. The assets go directly into the trust and belong to the trust. The SSI/MA recipient is considered the beneficiary and has no control over the assets, even though they are there for his or her benefit.

    There can be penalties, however, for taking money out of the trust. If the money were given directly to the beneficiary, in the form of cash, then the benefits would be reduced dollar for dollar. If the trust gives the beneficiary food, shelter or clothing, then the benefit rate will be reduced by approximately one-third. If, however, the trust gives the beneficiary something that is other than food, clothing or shelter, then there is no reduction in the benefit rate. It is very important to have a trustee who understands the SSI/MA rules.

  7. Who would be a good trustee for me?
    • Someone that you trust.
    • Someone who understands the needs of the disabled individual.
    • Someone who knows the SSI/MA rules.
    • Sometimes this can be a family member, a bank or a financial planner.
    • You choose the trustee or trustees whom you think will best manage the assets for you.
  8. How do I know what kind of Trust is right for my family?
    You should see an attorney who specializes in planning for families with special needs.
  9. What happens if I don't set up a special needs trust for my loved one?

    Either you would literally have to disinherit the disabled person, so that the inheritance did not make him or her ineligible for benefits, or the disabled person would receive the inheritance directly and lose his or her government benefits, possibly for a long time.

The legal opinions expressed herein are the result of research specific to certain areas of estate law in the state of Georgia and should not be taken as generalizations about wider areas of law. The author retains all copyrights and copies may only be distributed with written permission of the copyright owner. Distribution to any person other than the intended person is expressly prohibited. Georgia and federal laws change frequently, different situations may yield different results under the law, and you should always consult with an attorney regarding these and other legal matters. Finally, different attorneys may have different opinions about the same areas of law, and, particularly on tax matters. There are many divergent sources of law which add confusion. For example, a U.S. District Court ruling which is different from the position of the Internal Revenue Service. Please consult with an attorney regarding specific questions and situations.