Estate planning ensures that all of your assets are wrapped up according to your wishes before you die. One of the noteworthy aspects about estate planning is that it caters to all walks of life; rather than exclude certain groups, estate planning takes into account everyone, even those with special needs. Our goal at Davis, Davis & Associates, P.C. is to help you provide all of your children with the life you want for them. If this sounds like something applicable to you and your family, consider creating a Special Needs Trust, commonly referred to as an SNT.
There are three types of SNTs: first party SNTs, third party SNTs, and pooled SNTs. First party SNTs are funded directly from the child and are always irrevocable. This means that the funding for the trust comes from that child’s inheritance or other capital. Third party SNTs are revocable and set up through the decedent’s Last Will & Testament or other testamentary. Third party SNTs are also funded by the parents or guardian throughout their lifetime. Pooled SNTs are either a first or third party SNT – you get to choose the funding method. The most significant criterion when considering a pooled SNT is the age requirement: the child must be 65-years or older.
Another crucial decision when it comes to SNTs is who to designate as trustee. Like other trusts, there are a few options. First, you can designate a person, whether that be a family member or a family friend. The second option is to designate a non-profit organization. In Alabama, one of the most common SNT trustees is Alabama Family Trust. If you decide to form a pooled SNT, you will designate a non-profit organization as trustee.
A significant misnomer about SNTs is that they are to be used for medical and standard living expenses only. While the main purpose of SNTs are to support your child throughout their lifetime, they are not required to be used for what some may consider as the “bare minimum”. SNT funds can be used for a number of things, including, but not limited to, attending athletic events; out-of-pocket medical and dental procedures; fun trips or vacations; attending religious events; and entertainment such as movies, concerts, etc.
The intent of a special needs trust is to support your child while maintaining their eligibility for governmental aid, such as Supplemental Security Income and Medicaid. Rather than worrying about your child after you die, see if a special needs trust is right for you by setting up a consultation at 251-621-1555.