It is estimated that over 40 million Americans have one or more physical or mental disabilities. The causes of disability are many and variable. Some people are born with a disabling condition, others as disabled as a result of disease or injury. With the increased occurrence of Autism and Alzheimer’s disease, we can only expect the number of people living with disability in our society will continue to grow.
According to the Social Security Administration, disability is defined as:
“The inability to do any substantial gainful activity by reason of any medically-determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve months.”
A child is considered disabled if he or she has a “medically determinable physical or mental impairment which results in marked and severe functional limitations."
Public Assistance for Americans With Disabilities
Many Americans with disabilities receive public benefits from the state and federal governments, such as SSI, Medicaid, food stamps, etc. Others are eligible or will become eligible to receive these benefits (i.e. disabled children that are cared for by parents during childhood, but become eligible for SSI and Medicaid at age 18). These public benefits are means tested – meaning that the recipients can only have income and/or assets below a certain very minimal level to maintain eligibility for these programs.
In the case of the parents of a disabled child, how can they help their child and not disqualify the child from the benefits of these public programs? The greatest fear of many parents of a disabled child is what will happen to that child after they die. What can be done to plan for the child to continue to receive the quality of life they deserve when the parents are gone?
The Benefits of Special Needs Trusts (SNTs)
Special Needs Trusts (SNTs) allow for disabled persons to have the benefit of support, inheritances, injury settlements, etc., and yet maintain their eligibility for the vitally important public benefit programs. Parents can set up an SNT for their disabled child that will assist and support their child long after the parents have passed. Anyone can set up an SNT for the benefit of a disabled loved one. The person(s) forming an SNT are known as the Settlor(s). The Settlors designate a Trustee. The Trustee is the person ultimately in charge of running the trust for the benefit of the disabled person (known as the Beneficiary). An SNT can be funded in many different ways including direct cash contributions, property transfers, life insurance and inheritances.
A properly drafted SNT is the single best tool a family can use to take care of a disabled loved one over the short and long term. Special needs planning includes much more than merely executing the SNT document. The services of an experienced and compassionate attorney who can advise the family in lifetime financial and personal care planning is vital.