Ensuring That Loved Ones With Special Needs Are Looked After
Many families in Massachusetts have a member living with a disability or special needs. Special needs planning – when done the correct way with help from a skilled attorney – provides an individual with special needs with the ongoing financial support they need, all while preserving ongoing or future public benefits eligibility. Put simply, this can ensure that the money you put aside for your loved one – whether during your life or upon your death – can truly improve his or her quality of life without the state taking that money or terminating their public benefits.
However, this area of law can be particularly complex. It is constantly evolving, and the laws and regulations grow ever-stricter. Your planning must be done correctly to ensure that your plan will continue to achieve your goals for the life of the special needs individual.
At Curley Law Firm LLP, our lawyers represent a wide range of individuals, including parents and grandparents, siblings and loved ones, or even valued friends. Our Certified Elder Law Attorneys can help with a wide range of estate planning matters for special needs individuals of all ages.
Understanding Special Needs Planning: An FAQ
We are committed to helping you understand your options. Here are answers to some of the most common questions our team receives about planning for a loved one with disabilities.
What is the difference between a first-party and a third-party special needs trust?
The difference is in whose money funds the trust. A first-party special needs trust (SNT) is funded with the beneficiary’s own money. This often comes from:
- A personal injury settlement
- A direct inheritance
- Back-payments from Social Security
This trust type has a critical “payback” provision. When the beneficiary passes away, it can use any remaining funds to reimburse MassHealth (Medicaid) for the cost of their care.
A third-party SNT is funded with someone else’s money, such as a parent or grandparent’s assets, as part of their estate plan. Unlike a first-party SNT, this trust has no payback provision. When the beneficiary passes away, the creators of the trust can direct where any remaining funds go.
How do special needs trusts protect eligibility for SSI, SSDI and MassHealth?
A special needs trust protects eligibility for “means-tested” benefits such as Supplemental Security Income (SSI) and MassHealth. These programs have a strict asset limit, often capped at $2,000. Receiving even a small inheritance directly would make the individual ineligible and cut off their benefits. Social Security Disability Insurance (SSDI), on the other hand, is an earned benefit rather than a means-tested one, so it is not usually at risk.
With an SNT, the assets are owned by the trust, not by the individual. Therefore, the funds are not “countable” and do not affect eligibility. Our lawyers can structure the trust so the trustee can use the funds to pay for supplemental needs such as education, travel, personal items and other expenses that public benefits may not cover.
Who should serve as trustee, and what are the trustee’s duties?
The trustee is the person or entity responsible for managing the trust’s assets and making distributions for the beneficiary’s needs. Their duties include:
- Investing and managing the trust funds prudently
- Paying for supplemental needs without giving cash directly to the beneficiary (which could reduce SSI)
- Understanding how to pay for food and shelter without disrupting benefits
- Keeping detailed records and filing annual trust taxes
This role is critical. You can name a trusted family member, but they must be organized, able to follow complex rules and assertive enough to protect the beneficiary. Alternatively, you can name a professional, such as a bank, a nonprofit organization, or an attorney.
How do ABLE accounts coordinate with special needs trusts?
An ABLE (Achieving a Better Life Experience) account is a tax-advantaged savings account for individuals with disabilities. Its key benefit is that the first $100,000 in an ABLE account does not count against the $2,000 SSI asset limit.
In many cases, you can use an SNT and ABLE account together. The trustee of the SNT can make distributions into the ABLE account. The beneficiary, or their agent, can then use the ABLE account funds to pay for daily expenses, including food and housing, with more flexibility and independence.
For additional information about how our firm can help, please visit our practice areas page.
Contact A Massachusetts Lawyer Experienced In Special Needs Planning
For information about special needs planning or to discuss your particular situation with an experienced lawyer, please schedule a confidential consultation by calling Curley Law Firm LLP at 866-406-8582. You may also elect to submit our intake form, and we will contact you. Out-of-office consultations can be arranged by appointment. We serve clients in Wakefield and throughout Essex, Suffolk and Middlesex counties.