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What Are the Benefits of a Special Needs Trust in Illinois?

Posted on in Estate Planning

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A special needs trust is typically established by parents for a disabled child, or for disabled adults who are eligible for aid that will be lost if there are assets in their parent or guardian’s names only. It is a legal and fiduciary arrangement that allows a physically or mentally disabled person to receive income without interrupting or interfering with his or her eligibility for the public assistance disability benefits provided by Social Security, Supplemental Security Income, Medicare, or Medicaid. For disabled beneficiaries, this financial support can make their lives more enjoyable and fulfilling. Also known as a supplemental needs trust, this kind of trust may be a necessary part of your Illinois estate plan. An experienced estate planning attorney can help you draft this essential legal document to protect your family member.

Protecting Your Loved One

According to Illinois law, two types of supplemental needs trusts can be established: third party supplemental needs trusts and supplemental needs payback trusts. Both trusts provide the disabled beneficiary with the ability to improve his or her quality of life through services or assistive equipment that he or she would not receive with government assistance programs.

  • Third-Party Supplemental Needs Trust: This document is a trust for the benefit of someone who has a disability that “substantially impairs” his or her ability to care for himself or herself. The designated person is not “liable to pay or reimburse” a public or state agency for financial relief or services that he or she may have received. It is important to note, however, that the statute stipulates that the trust is discretionary, meaning the trustee determines how the monetary funds are spent, and the disabled person is not allowed control over the property and/or the income.
  • Supplemental Needs Payback Trust: In this type of trust, a disabled beneficiary is still eligible for Social Security and Medicaid benefits, but the beneficiary’s property can fund the trust without altering his or her benefit status. Basically, this means that if the disabled individual dies, any property left in the special needs payback trust must first reimburse Federal and State expenditures before being distributed to the beneficiary named in the trust.

Public assistance programs established for those individuals with special needs have certain income and asset restrictions. However, money put in the special needs trusts does not count toward the qualification for public assistance, as long as the funds are not used for food or shelter. Instead, the proceeds from this type of trust are generally used for medical bills, caretaker, and transportation costs, in addition to other relevant expenses.

It is crucial that the individual who creates the trust clearly explains the terms and directives of trust to ensure it is valid. A special needs trust must be established before the beneficiary reaches the age of 65.

Contact a Wheaton, IL Estate Planning Attorney

Planning for the future can help alleviate stress and disputes down the road. Creating a special needs trust that will continue to provide for your disabled family member is an important undertaking. A knowledgeable DuPage County estate planning lawyer At Stock, Carlson & Duff LLC, we are well-versed in Illinois law and prepared to assist you so you do not have to worry about your loved one’s future. Call us today at 630-665-2500 to schedule a private consultation and learn how we can meet your family’s personal needs.

 

Source:
https://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=075000050K513.5

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