Legal Blog
The Weekly Scenario: Special Needs Trusts
Question: I have an adult daughter who is developmentally disabled. She is able to work and receives Social Security Disability Insurance as well as Medicare. Is a special needs trust something I need to consider in my estate plan?
Answer: Social Security Disability Insurance, or SSDI, is a benefit that individuals receive because they have worked and have paid into the social security system. SSDI is not a needs-based program. If the individual is receiving SSDI, she can only work a limited amount of hours and/or have a certain amount of earnings, otherwise, she could possibly lose her SSDI benefits.
By contrast, supplemental security income, or SSI, is a benefit individuals receive when they are permanently disabled and qualify because they have very limited resources. Similarly, Medicare is not a needs based program, rather it is an age-based health insurance program. A special needs trusts is designed to allow an individual to create a trust for the benefit of someone who qualifies for a needs based program such as SSI that can be used to supplement the government benefit without disqualifying the individual from the program.
Comment: If you knew for sure that your daughter was never going to need SSI in the future, and will continue to solely receive SSDI and Medicare, then such a trust is not likely to be needed to protect her ability to remain a recipient of those benefits. However, it might be prudent to create a special needs trust if the future is not certain in terms of her benefits. I would tend to err on the side of caution and create such a trust, but as always, it depends on what we’re trying to achieve.
As always, if you have any questions or would like to learn more,
please contact Steve Shane at sshane@offitkurman.com or .
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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