A special needs trust in Naperville could allow you to provide for a loved one’s future without curtailing their eligibility for support programs. If structured and managed correctly, a special needs trust could enable a disabled individual to enjoy a comfortable quality of life while continuing to receive Social Security and other benefits.
Both federal and state laws could affect the operation of a special needs trust.
To ensure that a special needs trust functions as intended, it is wise to consult a seasoned trusts lawyer to assist in establishing the trust.
In addition to basic requirements for establishing and operating a trust, special needs trusts in Naperville must comply with specific state and federal laws to avoid interfering with eligibility for medical assistance and other programs, such as Supplemental Security Income (SSI). For instance, 42 U.S.C. §1396p(d)(4) allows individuals to move assets to a special purpose trust without disqualifying them from Medicaid eligibility. However, to legally establish this type of trust, an individual must meet the statutory definition of disability, funds must be used for that person, and the state must receive funds to offset Medicaid payments after the death of the disabled individual.
Similarly, 405 Ill. Comp. Stat. §5/5-105 specifies that if someone who receives Medicaid is the beneficiary of a discretionary trust under the state Trust and Trustees Act because of a “disability that substantially impairs the individual’s ability to provide for his or her own care or custody and constitutes a substantial handicap,” the trust should not be considered part of that person’s estate. Requirements regarding special needs trusts are also contained in the Illinois Administrative Code.
Many individuals with special needs find it challenging to earn enough income to meet all their needs. Government programs such as Medicaid and SSI provide modest benefits for individuals with disabilities, but only if they have few assets available. If families wanted to provide support for a disabled family member, it used to be an all-or-nothing proposition. Only if they cut off the individual from their assistance could the disabled individual receive government benefits. If the family provided some help, then the individual would be disqualified from receiving many benefits.
A special needs trust allows Naperville families to provide assistance to fill the gaps left by SSI payments and Medicaid coverage. Funds received from a special needs trust could cover additional expenses and improve the quality of life without affecting eligibility for medical assistance and other programs.
Naperville special needs trusts may be one of three types. A “self-settled” special needs trust is funded with the disabled individual’s assets. The individual must be under the age of 65, and the remaining assets in the trust must be designated to go to the state at the time of the individual’s death to make up for Medicaid payments. In situations where funds of self-settled special-needs trusts are pooled and managed by a nonprofit organization as trustee, the trust is often referred to as a pooled trust.
A trust that is funded by assets of someone other than the disabled individual is known as a third-party special needs trust. Remaining funds in this type of trust go back to the person who funded the trust.
A special needs trust could be a valuable tool when planning for the needs of an individual with disabilities who cannot work or requires extra care. However, a trust must be established in compliance with requirements, or individuals may lose access to benefits.
Newly received assets may need to be held for a time before they can be put into a special needs trust. It is advisable to consult an attorney for assistance with establishing or managing a special needs trust in Naperville.
