Q. I have a modest estate which I would like to leave to my children. One of them has special needs and is receiving governmental benefits, and will need such benefits for the rest of her life. It’s my understanding that if she receives an inheritance, she will lose her benefits until the money is consumed. These governmental benefits meet her basic needs but aren’t sufficient to provide the “little things” such as spending money, toiletries, and the like which are important to her. Is there any way I can protect these governmental benefits while still providing for her in my will?
A. If your will simply distributes a share of assets to this daughter or if you have no will and she receives the distribution by operation of law, her benefits will most likely be terminated until the bulk of that money is consumed for her basic needs.
You can provide a “special needs trust” in your will. The trust will provide that the assets passing to this daughter will be held in trust but are not available to meet the needs that would otherwise be provided by governmental benefits. The main purpose of the trust is to provide these special needs that the governmental benefits don’t pay for, such as spending money, travel funds, personal items such as radios and televisions, gifts on her behalf to friends and relatives, a paid companion, health care or dental services and supplies, special equipment, training programs and rehabilitation that are supplemental to those the beneficiary might receive under a government assistance program. It is important that there is no obligation of the trustee to expend any money for these special needs, with any distributions to be purely in the trustee’s discretion.
The trust will provide that if the assets are ever claimed by a governmental agency or deemed to be a resource, the trust will terminate with the assets distributed to the other children, with the request that they still hold these assets for her special needs.
Any money left in the trust at the death of this daughter would be distributed to the other children or however else you might direct.
If you so direct, the other children can be trustees of the trust so they would have the responsibility of utilizing the trust assets in the manner specified. It is important to provide a number of alternate trustees in case the other children or trustees cannot serve while the daughter with special needs is still living.
By utilizing a special needs trust, you can protect the governmental benefits available to your special needs daughter while still having money available to pay for the “extras” that will make her life more fulfilling.