From Attorney Tim Bupp, chair of the CGA Law Firm Estate Law practice group.
If your beneficiary is a person with a disability (“PWD”), creating a special needs trust for their benefit can be one of the most important things you ever do. Our goal in estate planning is to ensure that our assets will provide our loved ones with benefits for their health, safety, and well-being. In some circumstances, such a beneficiary may already be receiving state or federal benefits such as Medicaid, SSI, or SNAP benefits, which are “means-tested”; that is, a beneficiary with too many assets in their name may no longer be qualified for the benefit. In such cases, a special needs trust can be a real lifesaver for the beneficiary.
1. Third-party special needs trusts. If my loved one is a PWD, and I want to provide for him or her without disqualifying them from their government benefits, then the best way to avoid problems is to create a special needs trust for the PWD in my own estate planning documents. Such a trust is easy to create and straightforward to administer. A trusted family member or friend can serve as trustee for the PWD. The trust itself can hold assets and assure that they are used to supplement, but not to supplant, the governmental benefits for which the PWD is eligible. The trust provisions can name backup trustees, name backup beneficiaries, and provide guidance to all parties involved to ensure that their needs will always be met. By avoiding having those assets ever become the property of the PWD, we can assure that loved ones will remain eligible for their important state and health benefits.
2. First-party special needs trusts. If my loved one is a PWD, and I want to provide for him or her without disqualifying them from their government benefits, then the best way to avoid problems is to create a special needs trust for the PWD in my own estate planning documents. Such a trust is easy to create and straightforward to administer. A trusted family member or friend can serve as trustee for the PWD. The trust itself can hold assets and assure that they are used to supplement, but not to supplant, the governmental benefits for which the PWD is eligible. The trust provisions can name backup trustees, name backup beneficiaries, and provide guidance to all parties involved to ensure that their needs will always be met. By avoiding having those assets ever become the property of the PWD, we can assure that loved ones will remain eligible for their important state and health benefits.
3. Charitable-trustee SNTs. In some circumstances, it may be difficult or impossible to find an appropriate friend or family member to serve as trustee in a first-person SNT. A solution to such a problem lies in creating a “pooled” first-person SNT with a charitable trustee to oversee the trust administration. Such a Trust utilizes as a trustee a skilled charitable entity that will provide protection and assistance to the PWD during their lifetime. After the passing of the beneficiary, any remaining assets will be utilized by the charity to benefit other disabled persons in a similar situation, thus passing on the good service of the trust funds to others in need.
At CGA, our practitioners can provide counseling to our clients regarding trust planning for special needs, including trust planning and guardianships. We strive to advise all of our estate planning clients on the importance of including a contingent SNT in the provisions of wills and trusts, to assure that, even in unforeseen circumstances, the protections of an SNT are present. Our attorneys are able to help you with situations involving special needs trusts, and other matters involved with your estate planning.
Tim Bupp has practiced for twenty-five years with CGA Law Firm in estate planning, estate administration, and elder law. Tim is an Accredited Estate Planner (AEP) by the American Association of Estate Planning Councils and a Certified Elder Law Attorney (CELA) by the National Association of Elder Law Attorneys. He is certified in Estate Planning and Pension Law Planning by the Temple University Beasley School of Law, from which he also holds a Master of Laws degree in Tax Law. He also holds a JD from the Pennsylvania State University Dickinson School of Law, an MBA from York College of Pennsylvania, and a Bachelor of Science degree from Penn State. Tim has chaired the Estate Law Section of CGA Law Firm for ten years, where he is a shareholder. Reach Tim at tbupp@cgalaw.com or 717.848.4900.
Timothy Bupp
Estate Law Chair, Shareholder
Read Tim’s Bio Page in full HERE.
