RoseLaw FAQ

RoseLaw presents the following in order to cover some of the most frequently asked questions about special needs trusts. This list is not meant to be exhaustive or to cover every important issue.
1. What is a Special Needs Trust? A Special Needs Trust is a specialized legal instrument especially designed for the benefit of a disabled individual.
2. Why should I establish a Special Needs Trust? A Special Needs Trust permits an unlimited amount of assets to be set aside for a person with a mental or physical disability. If the trust is drawn up properly, those assets are not counted for purposes of qualifying for certain valuable government programs including Supplemental Security Income (SSI) Medicaid, vocational rehabilitation, subsidized housing, and other benefits based upon need and limited to those with personal assets of less than $2,000.
3. What is the main benefit of a Special Needs Trust to a disabled family member? The Special Needs Trust provides supplemental income that permits the disabled individual to take advantage of travel, educational or recreational opportunities that are life enhancing but not available using government programs.
4. When should a Special Needs Trust be established? A Special Needs Trust can be established at any time before the beneficiary’s 65th birthday but many Special Needs Trusts are established much earlier in the life of a disabled individual as a way of holding assets for the benefit of that individual in case caregivers are no longer present.
5. Are the Costs of Establishing a Special Needs Trust tax deductible? Yes the costs involved in creating the trust are tax deductible since it is considered part of Estate Planning
6. My family is sufficiently wealthy to afford to take care of our disabled child. Why should we establish a Special Needs Trust? Since funds placed in the Trust are not counted against the $2,000 upward limit to qualify for government programs, why sacrifice services that might be available to your relative especially since your family has paid taxes so just such programs could be funded? 
7. Are funds placed in the trust protected against seizure by the creditors of the disabled person? Funds placed in a Special Needs Trusts are not subject to creditors or seizure
8. What kind of assets can be used to fund a Special Needs Trust? All kinds of assets may be used to fund a Special Needs Trust including inheritances, insurance proceeds, settlements etc. Many special needs trusts are funded through "survivorship" or "second-to-die" life insurance policies that cover both parents and pay out on the death of the last to die.
9. Instead of establishing a Special Needs Trust, why can’t I just leave money to a sibling to take care of the needs of my disabled child? Funds placed in a Special Needs Trust for a disabled individual are not subject to seizure in a court proceeding but the same would not be true of funds held by a non-disabled sibling for the benefit of the disabled person. Without a Special Needs Trust, therefore the funds you wish to set aside could be used to pay the creditors of the non-disabled sibling therefore depriving the disabled child of financial security.
10. What is the role of the trustee? The trustee is absolutely necessary to ensure eligibility to government programs like SSI and Medicaid since your child will have no control over the money. Trustees are typically trusted family members, banks, or financial professionals.
11. What special language and specific provisions should a Special Needs Trust contain? A properly drawn up Special Needs Trust should reference the appropriate language in the Omnibus Budget and Reconciliation Act (OBRA-93) and include relevant provisions from the United States Code (USC). It must also be carefully drafted to avoid appearing as though it were a basic support Trust.