Special Needs Planning in Chicago, IL

It is important for everyone to consider what will happen to them and their family obligations as they age and after they die. Part of this planning is to decide what will happen with their assets. This process and these decisions become more difficult when one of the individuals you want to provide for is unable to care for themselves. Although it becomes difficult to make some of these life decisions, it also becomes evident that families need to take the next step in having a plan in place.

Individuals Who Receive Government Benefits

Individuals who receive Social Security Supplemental Security Income (SSI) benefits, Medicaid and other state benefits are very limited in what they can have in assets and income to maintain these government programs. A key objective for families in the long term planning process is to insure these public benefits are still provided to their loved one while supplemental support from a special needs trust will be made available to the individual with disabilities through their lifetime.

Medicaid and other government benefit programs consider income and assets a resource to an individual for purposes of determining eligibility for assistance in qualifying for public benefits (SSI/ Medicaid). SSI benefits are only available to indigent individuals who are aged, blind or disabled. Individuals who receive SSI benefits are also limited in their total earned/unearned income and assets that cannot exceed $2000.

Individuals who become disabled and need to move into a nursing home or otherwise use Medicaid benefits will want to protect their assets to insure that they have money available to provide for the extra costs of long term care.

Creating a trust for an individual with a disability and the elderly assures their eligibility for entitlements and provides a means for providing a higher quality of life for the individual.

The first and most essential distinction to be made in deciding what kind of trust to create is where the money is coming from.



Money which belongs to anyone other than the person with a disability should be placed in a Third Party Trust. This would include money from parents, grandparents, aunts, uncles, siblings, spouses and children who want to leave money to an individual with disabilities. However, once a person such as a parent, grandparent, uncle has died with a will that provides for money to be given to a specific person with a disability named in the will or trust whereby it’s not directed to a Special Needs Trust, but left directly to the person with disabilities, it is too late to use this Third Party Trust option. Money that is the result of a personal injury settlement or a back payment from Social Security cannot be placed in this Third Party type of trust either if the assets belong to the individual with disabilities.

Money that belongs to an individual with disabilities cannot be placed in a Third Party Trust, but a Self Funded Payback Trust can be utilized as a great secondary option. This could include inheritances, a gift from family/friends, back payment from Social Security or a personal injury settlement/lawsuit settled naming the person with the disability as the beneficiary.

Mixing third party money with an individual’s own assets in a special needs trust will result in a determination that all of the money belongs to the individual and thus create payback provisions for the trust. This is not what a family wants to do. Thus, it is essential that the two kinds of money never be mixed together and that two special needs trusts be created, a third party trust with third party money and a payback trust with the individual’s personal assets. The payback trust should be spent first with the payback provisions in the termination section of the trust document. The third party trust document does not have payback provision, so it should be preserved for use after the payback trust is spent leaving it for the individual through their life while the remainder upon the death of the beneficiary can be distributed back to the family.

Get more information about:
Third Party Funded Trust Info

Self Funded Trust Info