Also called a supplemental needs trust, a special needs trust (SNT) is a fiduciary arrangement designed to hold and manage assets for a person with disabilities. This type of trust is intended to provide for the supplemental needs of the beneficiary without jeopardizing their access to benefits such as Medicaid or Supplemental Security Income (SSI). At Johnson and Taylor, our trust attorneys in Salem, Oregon can help you understand how a special needs trust works and determine whether it’s appropriate for your specific circumstances.
Understanding Special Needs Trusts
The role of a special needs trust is to enhance the quality of life of a loved one with disabilities by providing for their supplemental needs. Funds from special needs trusts in Oregon may only be used for certain things, such as entertainment, education, and medical expenses not covered by Medicare or Medicaid. Although these funds typically cannot cover needs like housing costs and food, they may be used for:
- Vacations and travel
- Entertainment and recreation
- Home furnishings, electronics, and other supplemental items
- Vehicles
- Transportation services
- Medical devices
- Goods and services not covered by medical insurance, such as eyeglasses and dental work
- Training and education
- Insurance
- Legal expenses
- Payments for a hired companion
- Burial expenses
It’s vital for a trustee to know how proceeds from a special needs trust may be used. A wills and trusts attorney can evaluate your circumstances and advise you on choosing a person who understands how these specific rules apply. If you don’t have anyone specific in mind, your attorney may recommend appointing a professional trust administrator.
Types of Special Needs Trusts in Oregon
The most common type of SNT is a third-party special needs trust. This type of trust is established by someone other than the beneficiary and is usually a parent, grandparent, guardian, or another family member.
A self-settled special needs trust, also called a first-party SNT, is funded with assets owned by a person with disabilities. A first-party SNT is often funded with proceeds from a personal injury settlement, inheritance, or other sources. It’s important to note that upon the beneficiary’s death, Medicaid and other means-tested benefit programs may have a right to recover funds from the trust to reimburse the government for benefits provided during their lifetime.
Creating a Special Needs Trust
A special needs is created by a grantor and managed by a trustee for the benefit of the person with disabilities. It must be carefully drafted to ensure compliance with state and federal laws that apply to trusts and public benefit programs. Assets can be transferred into the trust during the grantor’s lifetime or through provisions in a will or other estate planning documents. Hiring a wills and trusts attorney with experience in special needs planning can ensure the trust meets all legal requirements.
Duties of a Trustee
The trustee has the fiduciary duty to manage the trust assets prudently and in the best interests of the beneficiary. This includes investing assets, filing tax returns, and making distributions according to the terms of the trust and the law.
Trustees are also responsible for maintaining accurate records of all trust transactions, including income, expenses, and distributions. They may be required to provide periodic accountings to beneficiaries and other interested parties as specified by Oregon law. One of their most important duties is to ensure that funds are used in a way that doesn’t jeopardize any public benefits a disabled person receives.
Preserving Eligibility for Government Benefits
Government benefits such as Medicare, Medicaid, and SSI have strict income and asset limits. When assets are placed in a special needs trust, they aren’t considered when determining a person’s eligibility for these benefits.
A special needs trust is a valuable tool for providing financial support and enhancing the quality of life for a loved one with disabilities. Ensuring that it’s meticulously crafted by an experienced lawyer and administered by a knowledgeable trustee is vital to preserving your loved one’s benefits, well-being, and financial security.
In addition to handling wills, trusts, and estate planning, Johnson and Taylor litigate personal injury and divorce and family matters. Our estate planning attorneys serve clients in Marion, Polk, and Linn County and surrounding communities.
Contact a Special Needs Trust Attorney in Oregon
At Johnson and Taylor, we’re dedicated to helping our clients find peace of mind, knowing that their loved ones will be well taken care of after they’re gone. If you need assistance with creating a special needs trust, call our office at 503-990-6641 or contact us to schedule a consultation with a trust attorney in Oregon. Members of our team are fluent in Spanish.