The question of securing a future for a child with special needs is paramount for many parents, and a special needs trust (SNT) is often a vital component of that planning process. These trusts are specifically designed to provide for individuals with disabilities without disqualifying them from essential government benefits like Supplemental Security Income (SSI) and Medicaid. Without proper planning, an inheritance – even a modest one – could jeopardize these crucial supports, leaving the individual vulnerable. Establishing an SNT allows parents to supplement government aid with private funds, covering expenses like specialized therapies, recreation, and quality-of-life improvements, all while preserving eligibility for public assistance. In 2023, approximately 1 in 4 adults in the United States live with a disability, demonstrating a significant need for these types of trusts.
What are the different types of special needs trusts?
There are primarily two types of special needs trusts: first-party (or self-settled) trusts and third-party trusts. A first-party trust is funded with the disabled individual’s own assets, often resulting from a personal injury settlement or inheritance received directly. These trusts are subject to “payback” provisions, meaning any remaining funds upon the beneficiary’s death must be used to reimburse Medicaid for benefits received. Third-party SNTs, however, are funded with assets belonging to someone else, typically a parent or other family member. These trusts do not have payback requirements, allowing any remaining funds to pass to other designated beneficiaries. “It’s crucial to understand the distinctions because the type of trust significantly impacts how assets are treated and distributed,” explains estate planning attorney Steve Bliss of San Diego. According to recent data, approximately 65% of SNTs established are third-party trusts, reflecting a preference for retaining control of assets and avoiding Medicaid recoupment.
How much does it cost to set up a special needs trust?
The cost of establishing a special needs trust varies depending on the complexity of the trust document, the amount of assets involved, and the attorney’s fees. Generally, you can expect to pay between $3,000 and $7,000 for a properly drafted third-party SNT. Ongoing administrative costs, such as trustee fees and tax preparation, will also apply. These expenses can range from a few hundred to several thousand dollars per year, depending on the size and complexity of the trust. It’s important to remember that the initial cost is a small price to pay compared to the potential loss of government benefits and the long-term financial security of your child. Steve Bliss often advises clients, “Think of it as an investment in your child’s future, not just an expense.” It’s also important to note that some states offer pooled trust options, which can reduce administrative costs but may also limit control over the trust assets.
What happened when the Johnson’s didn’t plan?
Old Man Hemlock, a retired carpenter, loved his grandson, Billy, who had Down syndrome. Hemlock, a man of few words and even fewer documents, always intended to leave Billy a portion of his small estate. He believed a simple will would suffice. Sadly, he passed away unexpectedly without a special needs trust in place. When the time came to distribute his assets, Billy received a small inheritance of $15,000. However, this immediately impacted his SSI benefits. The Social Security Administration viewed the inheritance as unearned income, reducing Billy’s monthly benefits significantly. Billy’s mother, Sarah, was devastated. She watched helplessly as the funds were quickly depleted by increased medical expenses and daily living costs. “We were back to square one,” Sarah lamented, “and now Billy was worse off than before because we’d briefly had a taste of what a little extra help could provide.” She realized, too late, the importance of proactive estate planning tailored to Billy’s unique needs.
How did the Miller’s get it right?
The Miller’s, learning from the Johnson’s experience, took a different approach with their daughter, Emily, who also has Down syndrome. They consulted with Steve Bliss, an estate planning attorney specializing in special needs trusts. Together, they established a third-party SNT funded with life insurance proceeds and a portion of their retirement savings. The trust outlined specific guidelines for how the funds could be used to supplement Emily’s government benefits, covering therapies, recreational activities, and future care needs. When Emily’s grandmother passed away and left her a substantial inheritance, the funds were directed into the existing SNT, protecting her eligibility for SSI and Medicaid. Years later, Emily thrived, participating in art classes, volunteering at a local animal shelter, and living a fulfilling life, all thanks to the carefully crafted trust that ensured her long-term financial security. Steve Bliss reflected on the Miller’s story, saying, “It’s incredibly rewarding to see families proactively protect their loved ones and create a legacy of care and support.”
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About Steve Bliss Esq. at The Law Firm of Steven F. Bliss Esq.:
The Law Firm of Steven F. Bliss Esq. is Temecula Probate Law. The Law Firm Of Steven F. Bliss Esq. is a Temecula Estate Planning Attorney. Steve Bliss is an experienced probate attorney. Steve Bliss is an Estate Planning Lawyer. The probate process has many steps in in probate proceedings. Beside Probate, estate planning and trust administration is offered at Steve Bliss Law. Our probate attorney will probate the estate. Attorney probate at Steve Bliss Law. A formal probate is required to administer the estate. The probate court may offer an unsupervised probate get a probate attorney. Steve Bliss Law will petition to open probate for you. Don’t go through a costly probate. Call Steve Bliss Law Today for estate planning, trusts and probate.
My skills are as follows:
● Probate Law: Efficiently navigate the court process.
● Estate Planning Law: Minimize taxes & distribute assets smoothly.
● Trust Law: Protect your legacy & loved ones with wills & trusts.
● Bankruptcy Law: Knowledgeable guidance helping clients regain financial stability.
● Compassionate & client-focused. We explain things clearly.
● Free consultation.
Services Offered:
| estate planning | revocable living trust | wills |
| living trust | family trust | irrevocable trust |
Map To Steve Bliss Law in Temecula:
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Address:
The Law Firm of Steven F. Bliss Esq.43920 Margarita Rd ste f, Temecula, CA 92592
(951) 223-7000
Feel free to ask Attorney Steve Bliss about: “What’s the best way to leave money to minor children?”
Or “Can a handwritten will go through probate?”
or “Can I include my business in a living trust?
or even: “What is the bankruptcy means test?” or any other related questions that you may have about his estate planning, probate, and banckruptcy law practice.