If you are someone financially planning for a loved one with special needs, you are likely aware of how important Special Needs Trusts (SNTs) can be.
These legal tools serve to provide financial security for your loved ones while preserving their eligibility for crucial government benefits.
But as with any area of law, rules, and regulations around these trusts are subject to change. That’s why it is absolutely essential to stay updated on recent legislative amendments and understand how they might impact your existing arrangements or future plans.
Recent changes to the rules governing SNTs could potentially alter the landscape of your financial planning. While these changes may seem complex and overwhelming at first glance, don’t worry – we’re here to help break them down in a way that makes sense.
A special needs trust is designed to provide financial support for individuals with disabilities without compromising their eligibility for government benefits such as Medicaid or Supplemental Security Income.
The trust establishment process involves legally transferring assets into a trust which can be used to pay for certain expenses not covered by government aid, like education, therapy, or personal care attendants.
Understanding beneficiary eligibility is crucial when it comes to special needs trusts. The beneficiary must be classified as disabled according to Social Security standards, meaning they have a mental or physical impairment that significantly limits their ability to engage in substantial gainful activity.
There is been a bit of a shake-up in the regulations that govern special needs trusts (SNTs). The government made some significant rule interpretations and policy modifications to special needs trusts with the Special Needs Trust Fairness Act of 2015. These alterations aim to provide better protection for beneficiaries while also ensuring trust funds are used appropriately.
As of December 13, 2016, individuals who are both mentally capable and classified as “disabled” by the government can now establish their own first-party SNTs. Previously, only parents, grandparents, legal guardians, or courts could do so. This shift corrects a historical oversight and empowers those with disabilities to take charge of their financial futures.
These changes can be overwhelming and might even evoke feelings of uncertainty or worry as you navigate through them. But remember, these policy modifications are aimed at protecting your loved one’s best interests and providing assurance that their needs will continue being met effectively even when you may no longer be around to do so yourself.
The new rules for special needs trusts allow beneficiaries with disabilities and mental capacity to establish their own first-party Special Needs Trusts (SNTs), enabling them to independently manage their financial affairs independently. while
This means that as a beneficiary, you can now expect more control over and clearer information about the trust’s management and distribution process.
Simply put, it makes your life easier. You will have more say in how your special needs trust is managed, which provides greater peace of mind, especially considering that this fund plays such a critical role in ensuring your financial security.
While having the ability to establish your own trust, there are some drawbacks to a first party trust.
Following the recent legislative changes surrounding Special Needs Trusts (SNTs), individuals with disabilities should reevaluate their estate plans to harness the newfound opportunities. With the ability to establish their own first-party SNTs, mentally capable individuals meeting the “disabled” criteria now possess greater control over their financial futures.
This shift emphasizes the importance of reviewing existing estate plans and seeking guidance from estate planning attorneys to explore the full range of options available.
Given these changes, individuals with disabilities might find it beneficial to collaborate with an estate planning attorney. Professionals in this field can provide expert insights into how to structure SNTs to align with specific financial goals while maintaining eligibility for means-tested public benefits.
By engaging in a thorough review of their estate plans and consulting with knowledgeable professionals, individuals with disabilities can ensure that their financial strategies reflect their aspirations and maximize their autonomy.
When updating your special needs trust plan, it is important to know when to get help. Trying to do it on your own can lead to misunderstandings and misinterpretations of the law. That’s why it’s crucial to reach out for professional guidance from Your Legacy Legal Care.
Our special needs planning attorneys at Your Legacy Legal Care stay abreast of the latest legislative changes affecting your estate and can provide advice for your unique situation.
With our experience, we can guide you through the process of setting up or modifying a special needs trust based on the latest guidelines. Contact us today for a consultation.
Kimberly Hegwood is the Managing Attorney of Your Legacy Legal Care, a Houston estate planning law firm. With more than 25 years of experience practicing law in Texas, she represents clients in a wide range of legal matters, including elder law, asset protection, estate planning, Medicaid crisis planning, probate, guardianship, and other estate planning practice areas.
Kimberly received her Juris Doctor from the South Texas College of Law and is a member of the State Bar of Texas.
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