By Timothy Barrett, Argent Trust Company

Timothy Barrett, Argent Trust Company

You probably know (or could be caring for) a child or an adult with an impairment that won’t allow them to ever earn a living or even live independently. For impaired persons who are eligible or entitled to public assistance, like Medicaid, SSI, a housing program or other services, the Special Needs Trust is essential to preserve a healthy quality of life.

The fact is that any funds they are given to an impaired person, like an inheritance from a parent’s Last Will or a settlement from an injury or medical malpractice, will cause them to lose eligibility to valuable public assistance. Those funds must be “spent down” to the resource limit, about $2000, before SSI and Medicaid benefits will be reinstated.

Wills and trusts

The Special Needs Trust can be funded by someone’s Last Will, by the Court, or even by the impaired beneficiary. These Trusts are designed to automatically limit distributions to comply with specific rules and provide only for the beneficiary’s supplemental needs so they keep their entitlements and their services are not interrupted. How is that possible?  The federal and state programs specifically allow it.

The Special Needs Trust, also called a Supplemental Needs Trust, is legally recognized by Medicaid and SSI as an exception to their income and resource limits. These programs ignore surplus funds held in a Special Needs Trust as long as they are earmarked only for supplemental needs that the public assistance doesn’t cover.

Don’t think you need a trust?

Why bother creating a Special Needs Trust if you’re not sure you’ll need one? Many times a family with a special needs member will have the means to care for him or her and aren’t particularly concerned about government benefits. But the day may come when the beneficiary needs to file for public assistance – consider a Special Needs Trust a well-planned insurance policy.

Simply put, early planning allows you to get past look-back provisions that can disqualify transfers to Trust and can allow you to efficiently set aside funds, by gift, settlement or at your death, for a disabled family member facing an unpredictable future. With healthcare costs rising at alarming rates and the possibility that a preexisting condition will make getting any coverage, outside of Medicaid, impossible, a Special Needs Trust may be the only way to ensure that your impaired loved one doesn’t outlive his or her resources.

Special needs include all the support, care, treatment, therapy, training and medicine you’d imagine necessary for a developmental disorder or other impairment that severely limits one’s financial and personal independence, including, of course, any qualifying total disability under Social Security and Medicaid rules.

Administration of a trust

A Trust administered by Argent Trust Company is controlled by a governing document that tells the Trustee what to do with the beneficiary’s funds. The Special Needs Trust must follow very specific rules: It must serve just one impaired beneficiary, should last his or her entire lifetime, provide a suitable standard of living, and still allow him or her to qualify for public assistance.

The size of the Trust fund can range from several hundred thousand to millions of dollars. The Trust is specifically designed so the beneficiary can obtain the very best care and support possible with the help of loving parents and relatives, but especially for when such family support is no longer here.

What does a Special Needs Trust cover?

The Special Needs Trust is allowed to cover medical and dental care not paid by other sources, private rehabilitation training, services or devices, supplementary education assistance, entertainment, hobbies, transportation, personal property and personal services, without affecting continuing eligibility for essential health coverage and other benefits.

Setting up this kind of safety net takes planning, legal and financial expertise, and the proper and compassionate administration of a professional Trustee. Argent is among the few local trust companies that expertly administer Special Needs Trusts.

What’s your next step? Share this with that friend that came to mind and click the link below for more information about Argent Trust Company. Stayed tuned next month when Argent Trust Company asks: How valuable is your art collection?

What’s your next step? Share this with that friend that came to mind and click here for more information about Argent Trust Company.

Timothy Barrett is a Senior Vice President with Argent Trust Company. Timothy is an attorney and wealth strategist who develops tailored proposals to protect, manage, and grow clients’ wealth with an emphasis on business succession, transfer and sales strategies for entrepreneurs.

Our mission at Argent is to protect, manage and grow your wealth. We take our mission very seriously. As an independent wealth management company, we deliver in-depth, personalized, unbiased service in a candid and common-sense manner. Our core service offering is professional trust management. Building from that core, Argent provides an array of related financial services.


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