How Do Special Needs Trusts Work in DuPage County?

 Posted on December 23, 2021 in Estate Planning Blog

Special needs trusts are a tool used to provide for disabled adults without defeating their eligibility for Medicare and other government assistance. This type of trust will allow the beneficiary to use these funds for expenses not covered by Medicare, like personal items and recreation. There are two types of special needs trusts most commonly used in Illinois: third-party special needs trusts and self-settled special needs trusts. If you are interested in protecting someone with a special needs trust, consulting a qualified attorney is the first step.

Why Do I Need a Special Needs Trust?

The problem with simply gifting or awarding money to someone with disabilities is that these funds can be counted as income for them, which can disqualify them for the benefits they rely on. Then, they are forced to spend their gift or award on the routine health care and living expenses these government programs would normally pay for. This goes on until the funds are depleted, which may not take long at all. The disabled person then must reapply for assistance programs, and is effectively back at square one without having really benefited in any noticeable way.

What is a Self-Settled Special Needs Trust?

A self-settled special needs trust is for those under 65 years old, and is funded using the disabled adult’s own assets. These assets may include any compensation won in a lawsuit, inheritances, or other monies the beneficiary himself is entitled to. However, when the beneficiary passes away, any unused funds remaining in the special needs trust must be used to pay back Medicaid for services provided during the beneficiary’s lifetime.

When a person’s disability is the result of an accident, they may receive a substantial amount after a lawsuit or settlement agreement. Placing these funds in a special needs trust allows the beneficiary to make the most of their winnings, rather than having the funds replace assistance temporarily.

What is a Third-Party Special Needs Trust?

A third-party special needs trust is funded by a donor other than the beneficiary, often a parent or other close relative. Family members of an adult with disabilities may use this type of trust to make sure their loved one has access to some money for personal needs without threatening their benefits. With this type of special needs trust, there is no Medicaid payback requirement. When the beneficiary passes, any remaining assets in the trust are returned to the grantor.

Call a Lombard Attorney for Special Needs Trusts

If you are interested in protecting someone in your life with a special needs trust, A. Traub & Associates can help. Our Lombard special needs trusts lawyers are experienced at creating trusts that make the most of any funds given or owed to adults with disabilities. Call us at 630-426-0196 for a confidential consultation.

Source:

https://www.dhs.state.il.us/page.aspx?item=14939