According to the U.S. Social Security Administration, in 2021, approximately 6.6 million people received monthly federal Supplemental Security Income (SSI) benefits based on their disability status. Statistics indicate more than one million of these recipients were disabled children under 18 years old, and millions more were between 18 and 65.
Virginia families who want to protect the futures of their loved ones who have a disability or other special needs often opt to establish a trust for them. While you want what is best, leaving your adult child or another disabled loved one an inheritance can actually do them more harm than good. If you are not careful, that inheritance can eliminate their eligibility to receive the federal and state government benefits they rely upon.
To structure your trust that preserves your loved one’s ability to file for benefits, speak with the special needs trust attorneys at Montagna Law to discuss your options. Our lawyers can help you explore all options and determine whether a special needs trust is right for you. Call our Norfolk law office today at 757-622-8100.
A special needs trust, also known as a supplemental needs trust, is formed to protect and distribute assets for a disabled beneficiary without disqualifying them from government public benefits, such as Medicaid and Social Security.
This carefully structured trust agreement covers expenses that government benefits do not cover, including leisure activities, mobility devices, and other general quality-of-life miscellanies. Someone other than the disabled beneficiary administers the trust, meaning the beneficiary does not have direct access to or control of the trust’s assets.
How you create your special needs trust fund matters. You do not want to leave assets intestate inadvertently. For a special needs trust, you need a grantor (a person who sets up the trust, also known as a settlor), a beneficiary (disabled recipient), and a trustee (an individual who manages the trust). In the Commonwealth of Virginia, you can choose from three different types of special needs trusts.
A self-settled special needs trust document is an irrevocable trust you can establish on behalf of a disabled beneficiary. A parent, guardian, or Virginia court can create a self-settled trust. Once the trust is set up, it is funded with assets owned by the disabled person. Upon the beneficiary’s death, the Commonwealth of Virginia inherits the remainder of the trust as reimbursement for the state benefits paid out during their lifetime.
A third-party special needs trust is created and funded by an individual other than the disabled beneficiary. In most cases, this would be a parent, sibling, or grandparent, but sometimes other inheritances bequeathed to the disabled individual fund the third-party trust. In contrast to the self-settled trust, a third-party trust can designate who will receive the remainder of the trust once the disabled beneficiary has died.
For instance, siblings and other descendants are common choices for receiving the remainder of the unused assets left in the trust. A third-party trust can be revocable or irrevocable, so before establishing one, it is a good idea to speak with a knowledgeable Norfolk special needs trust attorney who can help you decide which type is most appropriate for your circumstances. You want to be confident that you are making the right choices for your loved one’s specific situation.
A pooled trust is a special needs trust created and subsequently administered by a nonprofit organization. Individuals have separate accounts within the trust, but money is “pooled” together. Once established, the nonprofit organization might opt to serve as the trustee of the pooled trust or can select another trustee to handle the administration and management of the trust. A benefit to this type of special needs trust is that the beneficiaries receive more investment options because there is more money in the account than with smaller individual accounts.
Setting up any type of special needs trust can be complicated. To help prevent any issues, speak with a Norfolk estate planning attorney who is well-versed in Virginia law before establishing and funding a special needs trust.
As with any estate planning, you should consider the advantages and disadvantages of setting up a special needs trust for your family member or other loved one.
The primary benefits to establishing a special needs trust are that you can protect your loved one’s qualification for government benefits and that their assets will be administered by a trusted third party who can look out for their best interests.
The primary drawbacks to creating a special needs trust are the lack of control over the assets, difficulty finding a trustee, and the structure of what the trust can fund. For example, special needs trusts cannot be used to pay for food or shelter, which are essential considerations.
Speaking to an estate law attorney experienced with estate administration and planning lets you decide if a special needs trust is the right option for you or if another avenue to help provide for your loved one is the route you want to take.
A trust is a great way to avoid probate, which can be a long process in Virginia. However, anytime you want to establish a bequeathment to a family member, you want to make sure you choose the right type of trust, especially for special needs planning. There are a lot of factors to consider, and you want to know that you are doing right by your disabled loved one.
Between the intricacy of establishing a trust without risking eligibility for government benefits and the stakes at hand when planning for the future of a disabled loved one, trying to establish a trust on your own can be a daunting task. An experienced Norfolk special needs attorney can examine and discuss your circumstances, provide sound legal advice, outline your options, and help draft a trust compliant with Virginia law.
As you work to establish a special needs trust, you want to get it right. Working with an experienced Virginia law firm can help you provide for your loved one while protecting their ability to collect the important benefits they need. Our attorneys at Montagna Law are here to help you when you are ready to discuss your options.
In addition to special needs trusts, our lawyers can help you with other estate planning matters, such as wills, living trusts, powers of attorney, advanced medical directives, and more. Other practice areas include elder law, personal injury, family law, and more. Our law firm proudly serves Norfolk and the entire Hampton Roads area. Call us at 757-622-8100 or fill out our online contact form to speak with us.