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What to know about special needs trusts, from costs to finding help


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Experts agree that special needs trusts are vital for the wellbeing of someone with special needs.

“The main reason to have a special needs trust” is Mike Walther (certified financial planner), founder of Oak Wealth Advisors, Northbrook, Illinois.

Charles Italiano assistant director Westchester Disabled ON the Move in Yonkers New York says it’s equally crucial to ensure eligibility for benefits like Medicaid. [Supplemental Security Income]Medicaid and allow children with special needs to live a fulfilled life.

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Why should people with special requirements need government help?

Michael Beloff said that care costs can become prohibitive. Assist your partner Chartered Special Needs ConsultantBelvedere Wealth Partners Stamford, Conneticut

He said that daytime support for severely disabled individuals can cost more than $100,000 annually, and that a Northeast group home can be as low as $140,000 to $300,000.

According to him, “Depending on what the person’s impairment is, most families are unable to afford these services either during their life or after their death,” Medicaid is the solution.

Families must ensure that assets are protected in special trusts for Medicaid and SSI recipients. This will help to protect loved ones from losing this vital financial assistance.

Walther says special needs trusts should not be created until the child receives a diagnosis of special needs.

Trusts of two kinds

Two types of trusts are available for special needs. Italiano suggests that you should have them both.

• Third-partyItaliano stated that the trust was funded solely by the parents and is not in the child’s name. The funds are given to the children only after the parents die.

They are usually funded by insurance or funds from the estate of the parents, but can also be started without money at first.

The trust is funded once it has been established. It must also file its taxes. This money is used to pay for expenses not covered by Medicaid and SSI, like travel, clothing, computers, and other necessities.

If the trustee is the ultimate beneficiary, be aware of conflicts of interest

Michael Beloff

Belvedere Wealth Associates Chartered Special Needs Advisor

Beloff explained that it is a way of ensuring the money will remain and will be overseen or monitored by qualified trustees, such as family members, friends, outside parties, banks, non-profits, etc. Be aware of conflict-of-interest if the trustee is also the ultimate beneficiaries.

According to attorney Ray Falcon, who is principal at Falcon Law Group in Woodcliff Lake New Jersey, it’s crucial to inform other family members that they need to make gifts and bequests to trusts so the special child can receive Medicaid.

• First-partyTo protect income earned from inherited or earned income (not exceeding Medicaid income limits), the trust must be created using an individual’s assets. Italiano explained that distributions need to be authorized by the trustee.

He stated that “This trust type may include a payment provision so that funds remaining after the death of an individual go towards repaying cumulative Medicaid expenses.”

Work with an attorney