Create a Special Needs Trust via Your Will in Pennsylvania
If you have a loved one with special needs, you may want to include provisions in your will that include financial support for that person after your passing. However, when an individual enjoys public assistance and benefits because of a disabling medical condition, there are financial factors for eligibility. You could disqualify your family member or friend by making a distribution via your will, unless you create provisions under Pennsylvania’s statute on special needs trusts. A properly written will means you can still distribute assets to your loved one.
When a special needs trust is created by will, it is a type of testamentary trust. The document will also need to comply with relevant Pennsylvania laws on drafting, signing, and formalizing the will. You can count on a Lehighton wills and trusts attorney to advise you on your estate planning goals and help with the requirements. It is also useful to review some background on special needs trusts in your will.
Reasons to Consider a Special Needs Trust: Public assistance, including Social Security disability benefits, is available to individuals who qualify. Because these programs are needs-based, the rules are strict on the recipient’s net worth. If your loved one is too “rich” after receiving a direct distribution through your will, the benefits will be terminated.
By creating a special needs trust in your will, you are not giving a direct distribution. You are distributing funds to a trust, and the person with special needs is the beneficiary. The trustee is ordered to pay the beneficiary according to the trust terms. As long as the provisions comply with the law, the person with special needs will still qualify for public benefits.
Qualifying Distributions from SNTs: Under the statute, a special needs trust can only be created for a beneficiary who is under 65 years old. That person must meet the definition of “disabled” under the Social Security Act, and the beneficiary must have needs that cannot be met without the trust. Plus, the trustee can only make expenditures that bear a reasonable relationship to these needs. Examples include any cost that increases the beneficiary’s quality of life, such as:
- Nursing and custodial care;
- Medical expenses not covered by public programs or insurance;
- Travel and transportation expenses; and,
- Many other items that support care and quality of life.
Consider a Living Trust: Many of the same benefits of creating a special needs trust in your will are also available with a living revocable trust. To retain public assistance for your loved one, you would need to include the same provisions to comply with Pennsylvania law and the Social Security Act
Talk to a Carbon County, PA Wills and Trusts Lawyer About Options
A special needs trust is a smart option when you want to provide for a loved one while also preserving their interests in public benefits. However, it is critical to ensure that the document is properly prepared to leverage the advantages. To learn more please contact the Law Office of Kim M. Gillen, P.C. to schedule a consultation.