Preparing the Legal Document

In most situations, the basics of the Life Plan will be provided through the use of benefits such as Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Medicaid and the many other governmental programs available. But what about the supplemental needs that will provide a quality of life for the person with the disability. Items such as a new T.V., a camping trip, a new winter coat or the many other supplemental needs are usually provided by the family. Most families realize that as long as the primary care giver (parents or spouse) are alive, these supplementary items will be provided, but what happens when they are no longer here to provide these items?

Families have discovered that if an inheritance or gift is left to the person with a disability, then the governmental benefits are reduced or cut off because the person with a disability assets have exceeded the maximum limits. To avoid this problem, some families have left the share intended for the person with a disability to another family member. This can solve the problem of reduced or stopped benefits but doesn't guarantee that the person with a disability will receive the money for supplemental needs. Even if the relative has the best intentions, there always is the problem of creditors, lawsuits and a possible divorce that could invade the money intended for the person with a disability.

There is a better method. We suggest the person with a disability be excluded by name in the family wills and any amount intended for that person be placed in a qualified trust, usually referred to as a Supplemental Needs Trust. We further recommend that the trust be a living trust rather than a testamentary trust. The testamentary trust comes into being when the primary care giver dies, while the living trust is created now. By having an active trust currently, gifts and other assets could be placed into the trust now and the trust should be used on a regular basis to provide some of the supplementary needs of the person with the disability. This can provide some direction for the successor trustees as how the money should be used. Caution should be exercised in determining what assets should be placed into the trust. This trust is irrevocable and the money in the trust can only be used for the supplemental needs of the family member with a disability. The trust is considered to be another entity, which means that assets owned by the trust DO NOT count as assets of the person with a disability and WILL NOT disqualify them from governmental benefits, provided the trust has the proper language. The money is disbursed to the person with a disability at the sole discretion of the trustee. The initial trustee usually is the primary care giver, with several successor trustees named. Nominations for successor conservators, if needed, should also be named in the trust.

A word of caution: This is a specialized area of law and the legal documents must be carefully drawn according to the statutes of the state in which you reside. When speaking to an attorney it would be wise to ask them how many trusts of this nature have they completed in the past year. If it is less than twelve, seek another attorney.