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Posted on Sunday, December 4th, 2016 by Peter Klenk

From Our “Ask a Question” mailbag: “What is a Special Needs Trust?”

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A Special Needs Trust is a trust designed to hold assets for a person receiving needs-based government benefits. The person who benefits from the trust is the “beneficiary.”  Typically, the beneficiary is an individual with physical or mental disabilities who qualifies for needs-based benefits, such as Medicaid.  Giving this person money or making them an heir would disqualify them.  Special Needs Trusts were created to hold assets for these people without excluding them from the benefits.  A Special Needs Trust allows you to look out for your loved one by providing them with the little extras that will improve their life.

Special Needs Trusts Allow the Beneficiary to Benefit From Trust Assets Without Being Disqualified From Needs-Based Benefits.

The Trust’s Trustee looks out for your loved one.  Because many people with physical and mental disabilities are not able to manage money, they need help.  A Special Needs Trust allow you to pick someone to help.  This helper can be a family member or a professional Trustee.  This person then manages the asset for the Beneficiary.  Think of the Trust providing your loved one a protective wall.  This wall provides shelter from waste, abuse, and theft.  While protecting the assets, the Trustee has the discretion to use the trust’s funds to make your loved one’s life better.

Further, A Special Needs Trust Protects Assets from Theft, Abuse, and Waste.

An additional layer of protection is possible by naming a Trust Protector. This Trust Protector is typically a person who will look out for the beneficiary but does not wish to serve as Trustee.  The Trust Protector can monitor the Trustee with the right to remove and replace the Trustee at any time. The Special Needs Person’s sibling is a good candidate for Protector.  As Trustee the sibling would be in the uncomfortable position of perhaps denying the Special Needs Person funds.  This denial could lead to a rift between the Special Needs Person and the sibling.  Further, the sibling would be responsible for tax returns and investing trust assets.  These are not skills most siblings possess.

Instead, as Protector, the sibling monitors the Trustee.  By monitoring the trustee, the Protector can make sure the Special Needs Person is receiving the proper care.  If the Protector believe the Trustee is not performing well, the Protector may promptly fire and replace the trustee.  As a result, there is no hearing in court; the Trustee is just fired and replaced.  Consequently, Trustees behave better and fees are controlled.

In conclusion, I would be happy to brainstorm ideas for a Special Needs Trust that would best address your loved one’s needs. Contact our office for a free consultation if you have further questions about Special Needs Trusts or any other Estate Planning issues.

Wills, Trusts, Probate, and Estate Litigation, It’s All We Do!

Peter Klenk, Esq., LL.M.

About the Author: Peter Klenk

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Peter Klenk is the founding member of Klenk Law, a six attorney, boutique estate planning law firm.  We serve clients in Pennsylvania, New Jersey, New York, Minnesota and Florida.  Peter Klenk received his Masters in Taxation LL.M. from NYU Law School and his J.D. from the University of Minnesota Law School.  He served his country in the Navy JAGC during Desert Storm.  Easy to talk to, feel free to call Peter for an appointment.  We will make the process as easy as possible!

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