The harsh reality for families of special needs individuals is a constant fear of what their special needs loved one will do when their caretakers are no longer able to care for them. How can their caretakers ensure that their special needs loved one receives the support they need and has a good quality of life when they are no longer physically present to advocate for them? Often, special needs individuals are unable to work or live independently, and caring for them can be a full-time job itself. Additionally, ensuring they receive the support they need can be costly. Family members of special needs loved ones may fear that government benefits are not enough to meet the needs of their special needs loved ones. Government benefits may provide the bare minimum in terms of “needs”, but what about “wants” and quality of life?
What is a Special Needs Trust and Why Should I Set One Up?
Providing for a loved one with special needs can be tricky as it can sometimes preclude your special needs loved one from receiving government-sponsored support and services. Allowing a special needs loved one to inherit assets outright can disqualify them from receiving vital public benefits such as Medicaid and Supplemental Security Income (SSI). Under federal and state law, any individual with more than $2,000 in assets could no longer be eligible for those benefits.
There is a legal mechanism which allows families of special needs individuals to provide for their special needs loved one, which is called a special needs trust or a supplemental needs trust. Because assets in a special needs trust are not considered traditional assets and income, this allows a family member to put aside assets to be used for the benefit of their special needs loved one, without risking their access to government-sponsored support benefits. This is why individuals looking to provide for a special needs loved one should consult an experienced Wisconsin estate planning practice. This will help ensure that their estate plan is comprehensive and that their special needs loved one will be cared for without risking the loss of public benefits and support.
Types of Special Needs Trusts
There are three types of special needs trusts in Wisconsin. The first is a self-settled trust. A self-settled trust is funded by the beneficiary themselves, and the beneficiary must be under the age of 65. It can be set up by a parent, grandparent, or legal guardian. It can also be set up by court order. When the beneficiary of the trust passes away, the remaining assets are used to reimburse Medicaid for the total amount of medical assistance paid out. These trusts are especially beneficial in cases where the beneficiary has significant assets due to prior inheritance or any form of settlement money.
The second type of special needs trust is a third party special needs trust, which is funded by assets from any third party. Typically, this is how parents, grandparents, and other relatives provide for their loved ones after they’ve passed away. These funds can be used for the benefit of the beneficiary without jeopardizing the special needs loved one’s ability to receive public benefits.
The final type of special needs trust is a pooled trust which can be stablished with a non-profit pooled trust program which provides a professional trustee. There are two programs in Wisconsin which offer such services, including Wispact and Life Navigators.
Setting Up a Trust in Southeastern WI
If you would like to create a special needs trust or learn more about your options to provide for a special needs loved one, turn to The Collins Law Firm. We offer comprehensive estate planning, estate administration, business law, and elder law services. We proudly serve the people of Southeastern Wisconsin and the Milwaukee area. Our estate planning experts have decades of experience and will fight to protect your loved ones and your legacy. Contact us for a consultation today or call (414)-207-6292. Initial consultations are always free and confidential!