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July 19, 2024July 19, 2024

New Special Needs Trust Rules 2024: What to Know and How to Prepare

If you or a loved one lives with a disability, you may already know how a special needs trust can help maintain eligibility for certain public benefits. These unique trusts allow individuals with disabilities to set aside funds for their needs without losing access to vital programs like Medicaid and Supplemental Security Income (SSI). Recently, federal law regarding special needs trusts was updated with new statutes and regulations. These changes impact everything from age limits and trust contributions to required oversight and accountability. Anyone currently administering a special needs trust or looking to establish one will need to understand the latest rules to stay compliant. Let’s break down key updates regarding special needs trusts and provide tips to make the most of these important planning tools in 2024 and beyond.

Key Changes in the Latest Rules for Special Needs Trusts

Some of the most notable changes in federal law, under The Special Needs Trust Fairness Act of 2016, affect first-party special needs trusts in particular. First-party trusts are funded with assets belonging to the person with disabilities. Common sources include lawsuit settlements, inheritances, or work earnings. Some key things to note about the new rules include:

Self-Established Trusts: Individuals with special needs can now establish their own first-party special needs trust without the need for a third party or going through the courts. This is a major change that enables more independence.
Age and Funding Requirements: Trusts established by the person with special needs have the same benefits as those set up by parents, grandparents, guardians, etc. To qualify, the trust must be funded with assets of the disabled individual under age 65 and contain payback provisions upon death.
Increased Independence: A major goal of this law change is to increase the independence and empowerment of people with special needs by making it easier and more affordable to establish these trusts.

The latest rule changes have made it easier for individuals to establish their own first-party special needs trusts. However, proper guidelines must still be followed to ensure eligibility for government benefits. While first-party trusts are now more accessible, other types of special needs trusts remain important options as well. The needs, sources of funding, and family situation determine which type of trust is most appropriate.

Types of Special Needs Trusts

Special needs trusts are an important tool for providing supplemental support while preserving eligibility for government benefits. There are a few main options when establishing a special needs trust, each with its own rules, benefits, and drawbacks. Choosing the right trust starts with understanding the different types available:

First-Party Special Needs Trusts: Funded with the assets of the individual with disabilities. These trusts are often used when the individual receives a settlement, inheritance, or other personal funds.
Third-Party Special Needs Trusts: Funded by someone other than the individual with disabilities, such as a parent or grandparent. These trusts do not require payback provisions upon the beneficiary’s death.
Pooled Special Needs Trusts: Managed by nonprofit organizations, these trusts pool resources from multiple beneficiaries for investment purposes while maintaining separate accounts for each beneficiary.

Preparing for the New Rules

To ensure compliance with the new rules and make the most of a special needs trust, consider the following steps:

Consult with a Professional: Work with an attorney or financial advisor who specializes in special needs planning to understand the implications of the new rules and how they apply to your situation.
Review Existing Trusts: If you already have a special needs trust in place, review it to ensure it complies with the new regulations. Make any necessary amendments to maintain eligibility for benefits.
Educate Yourself: Stay informed about the latest developments in special needs trust law. Resources like the Special Needs Alliance and other advocacy organizations can provide valuable information and support.

By understanding and preparing for the new special needs trust rules, you can ensure that you or your loved one continues to receive the support and benefits needed to thrive.

I hope this detailed blog post helps you understand the new special needs trust rules for 2024. If you have any specific questions or need further assistance, feel free to ask! https://www.specialneedstrustsonline.com

July 19, 2024July 19, 2024

How do I use a first-person trust?

A first-party special needs trust (also known as a self-settled special needs trust) is designed to hold the assets of a person with special needs, allowing them to maintain eligibility for public benefits like Supplemental Security Income (SSI) and Medicaid. Here’s a detailed list of how a first-party trust can be used:

1. Funding Sources

Personal Injury Awards: Funds from a personal injury settlement can be placed into the trust to avoid disqualification from public benefits.

Retirement Plans: Assets from retirement plans can be transferred to the trust.

Divorce Settlements: Alimony or lump-sum payments from a divorce settlement can be directed into the trust.

Life Insurance Policies: Proceeds from life insurance policies can be placed into the trust.

Inheritances: Any inheritance received can be added to the trust to prevent loss of benefits.

2. Permissible Uses

Supplemental Needs: The trust can cover expenses not provided by public benefits, such as education, hobbies, and vacations.

Medical and Dental Care: It can pay for medical treatments, dental care, and specialized therapies not covered by Medicaid.

Personal Services: Funds can be used for personal care attendants, housekeeping, and other personal services.

Transportation: The trust can cover the cost of transportation, including the purchase and maintenance of a vehicle.

Adaptive Equipment: It can be used to buy adaptive equipment like wheelchairs, communication devices, and home modifications.

Recreational Activities: The trust can fund recreational activities and social events to enhance the beneficiary’s quality of life.

3. Trust Management

Trustee Responsibilities: The trustee manages the trust assets and ensures they are used in accordance with the trust’s terms and government regulations.

Irrevocability: The trust must be irrevocable, meaning it cannot be changed or terminated once established.

Age Requirement: The beneficiary must be under 65 years old when the trust is established.

Medicaid Payback: Upon the beneficiary’s death, any remaining assets in the trust must be used to reimburse the state Medicaid agency for benefits provided.

4. Benefits Preservation

Public Benefits Eligibility: By placing assets in the trust, the beneficiary can maintain eligibility for SSI and Medicaid.

Quality of Life: The trust allows for the enhancement of the beneficiary’s quality of life without jeopardizing their access to essential public benefits.

Would you like more information on any specific aspect of first-party trusts? https://www.specialneedstrustsonline.com

January 17, 2023February 12, 2024

What do you need to do when your child with a disability is turning 18?

When Your Child With A Disability Is Turning 18

When a child with special needs turns 18, it can be an emotional time for parents. On the one hand, they are proud of their child for reaching this milestone and excited to see what the future holds. On the other hand, there is a sense of uncertainty about how to best support their child as they transition into adulthood. Parents need to consider legal issues such as guardianship, power of attorney, and health care decisions. They also need to think about how to ensure that their child has access to appropriate services and supports in order to live a full life.

Rights and responsibilities that apply to everyone

When a child turns 18, parents can no longer legally make decisions on behalf of their young adult, regardless of the individual’s disability, capacity to make their own decisions, or whether they still live at home. In the school setting, parents are no longer automatically invited to participate in IEP (Individualized Education Program) meetings unless the young person approves. Medical staff may require proof of guardianship or power of attorney for medical decisions.

Everyone has certain rights and responsibilities that apply to them regardless of disability. Adults have the right to vote, and it is important for those with disabilities to be able to exercise this right. If a loved one has the capacity, they can help them register and get involved in the voting process. All young men need to register with Selective Service, which brings the possibility of military service. Additionally, every adult needs a state-issued ID card or driver’s license if they don’t already have one.

For people with disabilities, there are additional rights and responsibilities that must be taken into consideration. These include the right to access public services such as transportation and education, as well as the responsibility to follow any laws or regulations that may apply specifically to those with disabilities. It is also important for those with disabilities to understand their rights under various laws such as the Americans with Disabilities Act (ADA) so that they can ensure their rights are being respected.

Decision Making When Your Child With A Disability Is Turning 18

Supported decision making:

Under this concept, people with disabilities document who will support them and what those supports will look like. This option is gaining popularity and states are increasingly recommending it as the preferred model to support young people in their transition from minor to adulthood. Executing a supported decision-making document formalizes what is likely already happening between a person with a disability and those providing support. It looks different for everyone, depending on needs, and can change as necessary without the added complication of going to court. Importantly, it demonstrates that a person with a disability has the capacity to make his or her own choices.

Guardianship/Conservatorship:

Many families apply for guardianship, which is defined as “a person or agency appointed by a court to act on behalf of an individual.” Guardianship can be full or limited to certain aspects of your loved one’s life. If full, your child essentially loses all rights, and you take over providing for their needs. Limited guardianship is defined by the courts and is unique to the individual. Often, parents mistakenly look at guardianship as an “all or nothing” decision – full guardianship or nothing at all. A limited guardianship applies to certain aspects of your loved one’s life and may be an effective option in many situations. In either case, guardianship petitions take time to work through the courts so begin exploring options early.

Power of attorney:

With a durable power of attorney, and a medical directive (Healthcare Proxy in Massachusetts) your loved one assigns decision making for certain aspects of their life ranging from informal family guidance or control of a special needs trust to representative payee arrangements for supplemental security income (SSI) or social security disability insurance (SSDI). Power of attorney arrangements look a lot like supported decision making, but with one possible pitfall. Because your loved one assigns their power of attorney, they can assign this authority to someone else, without your knowledge or the benefit of support for their decision. A power of attorney is relatively simple and inexpensive option that can leave your loved one vulnerable to individuals who may not have their best interests at heart.

Finances

When a person with a disability turns 18, the Social Security Administration (SSA) changes the criteria for determining whether they are eligible for Supplemental Security Income (SSI). The SSA now looks at the beneficiary’s own cognitive or physical impairment and how it affects their ability to do any substantial gainful activity. This can be more difficult to prove than when they were minors, but fortunately, this typically does not impact people with intellectual or developmental disabilities. The financial requirements for SSI also become easier once a child turns 18. The SSA now looks at the beneficiary’s own income and resources instead of using their parents’ finances. Since many SSI beneficiaries who received benefits as children don’t have any other sources of income and don’t own any large assets, they likely won’t have any problem qualifying financially on their own. This can make it easier for them to continue receiving SSI payments throughout their lives.

ABLE Accounts

Open an ABLE Account for your child so they can save their money and still qualify for SSI. Learn more about ABLE Accounts here.

Housing - Apply for a Section 8 Certificate with your local housing authority

Bottom Line When Your Child With A Disability Is Turning 18

Reaching adulthood can be a confusing and overwhelming time for many people. With so many decisions to make, it is important to have a trusted source of information to help guide you through the process. This could include researching online resources, consulting with professionals such as lawyers or financial advisors, or reaching out to support services in your area.

Having access to reliable information is key when making decisions that will affect your future. It is also important to consider the bottom line when making these decisions – what are the long-term implications? Will this decision be beneficial in the long run? Taking into account all of these factors can help ensure that you make the best decision for yourself and your loved ones. Consulting with professionals who are knowledgeable about your situation can provide invaluable insight and advice when making these important life choices.

Need Help?

Need Information About Special Needs Trusts?

I am Tom Sannicandro, a Special Needs Trust Attorney and I am here to help. I am the founder of a nonprofit corporation that provides quality information about resources available to families as well as providing affordable Special Needs Trusts and estate planning for families. I have over 20 years of experience helping families just like yours. Find out more information at SpecialNeedsTrustsOnline.com or click here to set up a free appointment.

January 14, 2023February 12, 2024

What is right for your child with a disability, power of attorney, or guardianship?

What Is Right For Your Child With A Disability?

When your child with a disability is about to turn 18, there is a major life decision that you as a parent are involved in. Should you get a guardianship for your child or is a power of attorney enough to protect their interests?

Unfortunately, guardianship, by definition, alters the opportunities for an individual with disabilities to make independent choices and exercise control over their lives. Under guardianship, an individual can have the following rights removed: the right to marry; the right to determine one own’s friends; the right to vote; the right to seek or retain employment; the right to consent to a medical procedure, including a sterilization or abortion; the right to drive; the right to decide where to live; and many others. Under guardianship, an individual can have the following rights removed: the right to marry; the right to determine one own’s friends; the right to vote; the right to seek or retain employment; the right to consent to a medical procedure, including a sterilization or abortion; the right to drive; the right to decide where to live; and many others. Guardianship can have a crippling effect on the individual in limiting their potential for as much independence as they are capable.

Is Gaurdianship Right For Your Child With A Disability?

For some individuals guardianship is the right choice, where their disability clearly limits their ability to make decisions at all. But for many individuals with intellectual or developmental disabilities, a power of attorney and a healthcare directive can provide the needed support to help them with important life decisions.

A power of attorney and a guardianship are both legal tools that allow someone to act on your behalf if you become incapacitated. The main difference between the two is who chooses the person who will act for you. With a power of attorney, you choose the person you want to act for you. This person can be anyone from a family member or friend to a professional such as an attorney or financial advisor. On the other hand, in a guardianship proceeding, it is the court that chooses who will act as guardian. This is usually done after an evaluation of your situation and needs by social workers and medical professionals.

The Difference Between Gaurdianship & A Power Of Attorney

The decision to use either a power of attorney or guardianship should not be taken lightly, as it involves giving someone else control over important decisions in your life. It is important to consider all options carefully before making any decisions and consult with an experienced lawyer if necessary. Both tools can be useful in certain situations, but it’s important to understand their differences so that you can make an informed decision about which one is right for your child.

A power of attorney and guardianship are both legal tools that allow someone to act on your behalf if you become incapacitated. The main difference between the two is who chooses the person who will act for you. With a power of attorney, you choose the person you want to act for you. This person can be anyone from a family member or friend to a professional such as an attorney or financial advisor. On the other hand, in a guardianship proceeding, it is the court that chooses who will act as guardian. This is usually done after an evaluation of your situation and needs by social workers and medical professionals.

Need Information About Special Needs Trusts?

March 19, 2022February 14, 2024

New Non-Profit Serving Families

Special Needs Trusts Online - The New Non-Profit Serving Families

March 12, 2022February 14, 2024

Don’t Jeopardize Your Child’s Future

Set up a supplemental or special needs trust for a loved one with a disability — and avoid jeopardizing government benefits. Click here for more information

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