How to Develop a Special Needs Trust in Indiana

If you have a loved one with a disability, then you’ve seen first-hand how physical and/or mental disabilities can impact their ability to earn income or manage day-to-day activities without support. As a close family member to a person with a disability, you naturally want to provide them with physical, emotional, and financial support.

A special needs trust drafted by our experienced estate planning lawyers at Webster & Garino LLC can ensure your disabled family member is protected and supported even after you pass away.

Our compassionate attorneys understand the love you have for your family member with disabilities. That’s why we offer personalized special needs trust (SNT) services to residents in Westfield, Carmel, Fishers, Noblesville, and Zionsville, IN.

Special Needs Trusts: Understanding the Basics

A trust functions as a separate entity to hold assets so that their value is not legally in the beneficiary’s possession. A special needs trust is a type of trust that is specifically created to provide for your loved one with a disability.

Also known as a supplemental needs trust, it is designed to protect and manage your trust beneficiaries with disabilities while maintaining their eligibility for government benefits. A special needs trust is important because any other financial contributions you make, no matter how modest, can affect your beneficiary’s eligibility for programs like Medicaid and Supplemental Security Income (SSI).

Primary Goals of Special Needs Trusts

Preservation of a disabled person’s access to government benefits is the top goal of an SNT. If you do not engage in special needs estate planning, then any inheritance that passes to your adult child or minor with disabilities could cut them off from government benefits and payments.

Our seasoned attorneys know this outcome is never your intention, especially since the value of government benefits over a person’s lifetime would likely exceed even a considerable inheritance. We can help you establish and manage a legal SNT that meets all state regulations so that your loved one’s housing and medical care needs are always met.

An SNT can provide payment for vision care and other medical and dental expenses not covered by Medicaid or Medicare, without interfering with a person’s ability to receive government assistance.

Top Considerations When Setting Up a Special Needs Trust

When you decide to create a special needs trust in Indiana, there are several important factors you need to consider. At Webster & Garino LLC, our trust administration team will ensure that you meet all legal requirements when setting up an SNT for your disabled family member.

Some important aspects to consider include:

  • Has the disabled person received any assets yet?
  • Do you want other family members to be able to donate to the trust?
  • Who will be the trustees?
  • Will the trust be required to reimburse Medicaid after the beneficiary’s death?

It’s also important to note that an SNT is an irrevocable trust. This means that you won’t be able to amend, modify, or end the trust absent special circumstances or a court order. But it may keep the funds safe from any lawsuits or creditors down the line.

Consulting our trust lawyers who are knowledgeable about all special needs estate planning complexities will help you reach your desired outcome for your loved one’s financial future.

special needs trust

Types of SNTs

There are two distinct kinds of special needs trusts. Choosing the right type for you is crucial to achieving a satisfactory result for your family member with disabilities.

Third-Party Special Needs Trust

A third-party SNT is set up by a grantor who is not the person with special needs. Grantors, or settlors as they are also known, can be parents, grandparents, siblings, or other concerned individuals. If you are setting up a special needs trust for your loved one, you would be the grantor.

The assets that go into a third-party trust can come from:

  • Monetary gifts to the trust
  • Proceeds from life insurance
  • Redirection of inheritance into the trust

If you are a parent who wants to pass an inheritance through a trust to a child with a disability, you will do so through your will or living trust. If you plan to use a living trust to avoid the public eye of probate court, then a third-party SNT may be included as a sub-trust within your existing living trust.

But if multiple people in your family want to contribute their other assets to the trust, then you could establish a stand-alone, third-party SNT. This approach allows the trust to come into existence immediately and collect donations from anyone who wants to help your family member with disabilities cover future expenses from their unique medical conditions.

When the beneficiary passes away, any leftover funds may be distributed according to the terms of the trust. The law will not require that remaining funds be sent to the state’s Medicaid agency.

First-Party Special Needs Trust

An accident or illness could leave a previously healthy person with a disability. If you find yourself in this situation, you may need a first-party SNT. As of December 2016, federal law allows a disabled person who is declared mentally competent to create and benefit from a first-party SNT. Once created, you may then shift assets into the trust.

First-party SNTs could work for:

  • A person with disabilities who receives an inheritance
  • Someone who owns assets but developed a disability later in life

To create a first-party SNT, the government must officially recognize your disability status, and you need to be under the age of 65. The trust will only hold your assets and not serve as a receptacle for funds from other family members.

Indiana law will obligate you to set this trust up as irrevocable so that you can collect government benefits. Upon your death, any remaining funds must be given to the state’s Medicaid agency.

Dependable Special Needs Trust Solutions Since 2017

When making financial decisions for yourself or a family member with a disability, you’ll encounter complicated issues within family law in Indiana and estate planning. At Webster & Garino LLC, you can consult a trust lawyer who has experience guiding families through these important, long-term decisions. By planning for your loved one’s future, you can gain peace of mind that they will have access to all of life’s essentials for as long as they live. Contact Webster & Garino LLC at 317-434-3113 for all of your trust formation and administration solutions today.