According to the U.S. Census Bureau, nearly twenty percent of U.S. children under the age of 18 have special care health needs and/or special educational needs.
The RealityA family’s ability to provide their family members the level of commitment and care they need can often be challenging enough even before you combine the increased cost of care associated with a special needs family member.
The Universal Problem
Common for all families with special needs persons is the associated increased cost of living. Most families are able to provide for their family members with special needs but, what if something was to happen to the caretaker themselves? Depending on the severity of the family member’s circumstances, the incapacity or loss of their own caretaker can prove to make their lives permanently more difficult.
Give a Fighting Chance
Providing a safety net for family members with special needs can be done cost effectively and easily via entities such as 3rd party special needs trusts (SNT) for individuals receiving government benefits; or a Health Education Support and Maintenance (HESM) Supplemental Needs Trust for individuals who do not receive government benefits.
A 3rd party special needs trust is commonly created by family members with current gifts, or future property in their estate such as life insurance or inheritance. By using a 3rd party SNT, the beneficiary’s government benefits such as SSDI and Medicaid are preserved. However, the use of assets of the trust must follow guidelines and can only allow distributions for:
- Home improvements and repairs
- Travel and education
- Recreation and entertainment
- Medical insurance
- Telephone bills
- Internet and Newspaper subscriptions
- Services of a care manager
- Travel expenses of relatives
- Pay per view entertainment or Movies
- Tax payments
- Medical treatment for which public funds are unavailable
- Difference between a private and semi-private room in an institution
- Installation of a burglar alarm
- School tuition, books and supplies
- Health and Life insurance premiums
- Cleaning supplies and paper products
- Dental care, physical therapy, massages, support services, and other medical costs not covered by any benefit programs
- Home care services not covered by another program
- Personal services, including lawn mowing, house cleaning, grocery shopping and babysitting
- Airline and other transportation tickets
By comparison, a Health Education Support and Maintenance Supplemental Trust is not a special needs trust and is commonly used for compromised family members who either do not qualify or choose not to receive state and federal benefits. With an HESM trust there are no restrictions on the types of distributions the trust can make. However, HESM provisions are not exclusively for special needs use and can be implemented within any type of trust to provide Health Education Support and Maintenance to any individual the grantor sees fit.
Uncertainty of Need
Certain conditions such as degenerative diseases, Asperger’s or autism create uncertainty regarding the future functioning level and ability of the impacted family member. Having a trust which can change into a 3rd party special needs trusts or Health Education Support and Maintenance Supplemental Trust is crucial in designing a proper solution able to address all future needs.
Plan Today for Tomorrow
Many individuals and their families unfortunately begin the process of planning for themselves and their own family’s future too late in life. The possibilities of a family member becoming special needs are very real, but by creating a HESM trust or a trust with a special needs provision that can “activate” if something were to happen, you are ensuring the best possible future for your loved ones by preparing today.
Download our free Special Needs Trust assessment sheet below to learn more!