In my practice over the past 20 years (yikes), the clients I see are increasingly well-informed and smart, savvy consumers of our legal services. This is largely due to the Internet and the wide availability of information, as well as a new generation of people more comfortable with doing their own research to address their unique family issues. So, more people sit in my conference room and tell me that what they need is a special needs trust, rather than us informing them.
But the Internet is not always accurate. Unfortunately, when it comes to technical issues such as special needs planning, it can be difficult for the consumer to discern what information is reliable and what is not. Further, even correct information can be misleading to a layperson. As a result, I have found several common myths or misconceptions that I discuss with prospective clients on a regular basis:
My child is not on benefits now so I don’t think we need a special needs trust
The number one reason people establish special needs trusts for their loved ones or themselves is to protect eligibility for public benefits such as Social Security Supplemental Security Income (“SSI”) and sometimes Medicaid. However, that is not the only reason trusts are useful or even essential. Trusts are a private vehicle to manage assets and distributions for a beneficiary who may be unable to do so for themselves. Even a beneficiary with very good daily living skills may not be able to handle managing several hundred thousand dollars in assets. He or she may be vulnerable to predators as well.
Also, when we look at our child at age 12 or 20 or 30, we really do not know what the rest of their future may look like. They may need more assistance at a later point in life that we would not have been able to predict. Many parents especially are unaware of the hidden supports that they provide to their children every day, and when parents age or die it becomes much clearer what that child’s true abilities are. New programs and benefits are being established all the time. We cannot predict if there may be something available to our loved one in the future that could be very helpful to them in their daily living but which has asset and income eligibility rules.
Some families worry about a negative stigma being attached to having a special needs trust, or put similarly if the existence of the trust will affect their loved one’s independence or self-determination. In my view, there is no such stigma. The title does not have to say Special Needs Trust, although it probably should so as to make things clear for the Social Security Administration. Also, for the most part, our loved ones have been labeled all along the way already in order to receive needed services, such as through an Individualized Education Plan or through special programming.
Trusts are expensive, difficult, and burdensome
This might not rise to the level of myth but it is a misconception. While a Trustee must be knowledgeable about public benefits programs AND trust and tax law, he or she can also hire experienced counsel to guide through the process of administering the trust. In addition, individual professional Trustees are truly a bargain in most cases, and many family member Trustees do not charge any fees to the Trust. The benefits of having a special needs trust far outweigh any complexities added by managing a trust.
And really, the alternatives to a special needs trust are quite simply unacceptable. The primary alternatives are either establishing a Conservatorship through the state Probate Courts or leaving our loved one to fend for themselves with the money we’ve left them and choose advisors and counselors independently at a time when we as caregivers are no longer able to provide our guidance. Both of these alternatives will disqualify the disabled person from certain public benefits.
In addition, many clients still talk about leaving all the assets to their other children and having that child or those children be responsible for the disabled sibling. We call this morally obligated gifting. Although this alternative allows the disabled person to qualify for public benefits, this is a bad idea for so many other reasons. Even if your children are wonderful people and very well-intentioned towards their disabled sibling, leaving them assets directly causes those assets to be vulnerable to creditors and divorcing spouses as well as other liabilities.
Lastly, special needs trusts are primarily established by parents and are not intended to be funded until the last parent passes away. This means that the expense and burden of running a trust, regardless of the extent, does not routinely occur until decades later in a disabled person’s life, when someone needs to step into mom and dad’s shoes anyway.
Each family should weigh their individual options and decide whether a special needs trust is right for their loved one. If you have additional questions or need assistance establishing a special needs trust, please find experienced counsel in your area. Some great resources for locating an attorney are www.naela.org; specialneedsanswers.com; and www.specialneedsalliance.org.
Annette Hines, Esq. is the author of Butterflies and Second Chances: A Mom’s Memoir of Love and Loss. She is a powerhouse advocate for the special needs community. Not only has she founded the Special Needs Law Group of Massachusetts, PC, specializing in special needs estate planning, where special needs families compromise 80 percent of the firm’s clients, Hines brings personal experience with special needs to her practice, as the mother of two daughters, one of whom passed away from Mitochondrial disease in November 2013. This deep understanding of special needs fuels her passion for quality special needs planning and drives her dedication to the practice. For more information, please visit, https://specialneedscompanies.com/ and connect with her on Facebook, @SpecialNeedsLawGroup.