What you need to know about special trusts, from costs to help

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Confidence with special needs is essential for the well-being of a person with special needs, experts say.

“The most important reason to trust special needs is that people with special needs are often unable to make the right financial decisions on their own and / or others are at risk of financial exploitation,” said Mike Walther, founder of Oak Wealth. Consultants in Northbrook, Illinois.

The most important thing, according to Charles Italiano, in Westchester Disabled On the Move Yonkers (New York), is to maintain the right to public benefits. [Supplemental Security Income] and Medicaid, and giving children with special needs a fulfilling life. ”

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Why do so many people with special needs need government support?

Because the cost of surveillance can be astronomical, said Michael Beloff. partner and Chartered Special Needs Consultant at Belvedere Wealth Partners in Stamford, Conneticut.

For example, day care services for people with severe disabilities can cost more than $ 100,000 a year, while a Northeast group home can cost between $ 140,000 and $ 300,000 a year, he said.

“Due to the nature of the individual’s impairment, most families cannot afford to pay for these services out of their own pocket during their lifetime and after death,” he said. “That’s where Medicaid comes in.”

With SSI and Medicaid recipients accepting limited income and only $ 2,000 in liquid assets, it is essential that families protect their special needs bonds so that their loved ones do not lose that government financial support that saves their lives.

Special needs trusts should be written as soon as children have a special needs diagnosis, Walther said.

Two types of trust

There are two types of special needs trusts. Ideally, you need both, according to Italian.

• Third party: “This kind of trust is funded by the parents’ money, only for the child’s needs, and will never be in the child’s name, ”Italy said. “After the death of the parents, the money goes to someone other than the child.”

These are mostly funded by insurance and parent equity funds and can be set up initially without funds, Beloff said.

Once funded, the trust has its ID number and its declaration must be made. These funds are intended to cover expenses not covered by Medicaid or SSI, such as travel, clothing, computers, etc.

Check that the conflict of interest is also trusted by the ultimate beneficiary.

Michael Beloff

Special Needs Adviser with Belvedere Wealth Partners

“It’s a way to make sure the money is there and overseen by a qualified manager, such as a relative, a friend, or an outside party, such as a bank or a nonprofit,” Beloff said. “Please note that the conflict of interest is also the ultimate beneficiary of the trust.”

It’s important to know that other family members should make trustworthy gifts or bequests in order to avoid negative effects on the special child’s Medicaid entitlement, said attorney Ray Falcon, director of the Falcon Law Group in Woodcliff Lake, New Jersey.

• First: This trust arises with the individual’s assets to protect any income earned or inherited that does not exceed Medicaid’s income and assets limits. Italian explained that the distribution must be approved by the board of trustees.

“This type of trust may have a redemption provision, such that funds left over after an individual’s overdraft will be used to reimburse Medicaid’s accumulated expenses,” he said.

Working with lawyers

Costs vary in different parts of the U.S. to establish special needs trusts, but incorporating them into an overall real estate plan can add up to $ 2,000 to $ 6,000, depending on the complexity.

Parents should work with experienced special needs planning attorneys, especially because the wrong language can disqualify a trust, Walther said.

Falcon has recommended questions to the attorneys who are considering them. “You should ask a lawyer first, ‘How many trusts have you written?’ and ‘Have Social Security and Medicaid reviewed and approved your trust in my state?’ “

Renowned sources for finding specialized lawyers and planners are the Special Needs Planners Academy and the Special Needs Alliance.

What you need to know about special trusts, from costs to help

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