Trust can help care for disabled relatives |

Trust can help care for disabled relatives

Tracy Tutag and Jeffrey Apps
Vail, CO, Colorado

Those who care for family members who are physically or mentally disabled know how much time and attention are required to maintain the quality of life for these loved ones.

Many families worry about what will happen to these dependents when the caregivers are no longer able to provide care. Careful planning for the future can ease that stress.

An important item to consider is establishing a special needs trust, sometimes called a Supplemental Needs Trust. Most people with physical and/or mental disabilities depend on government assistance in the form of Social Security, Medicaid and other benefits, and may include continuing education and training programs in some states. Establishing a Supplemental Needs Trust can help preserve their rights to continue receiving governmental assistance.

Without such a trust, your dependent could be inadvertently cut off from government assistance.

A federal law stipulates that a special needs individual cannot have assets of more that $2,000 in total to qualify for assistance. That means people with special needs should not be named directly in a will, life insurance, or retirement funds. Instead, all benefits should be assigned to the trust.

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An attorney who specializes in this type of estate planning should draw up a trust in compliance with the Social Security Administration and special needs trust law. Such a trust will require a trustee who can be either an individual or an institution. If the special needs individual cannot make decisions for him or herself, then a guardian must be appointed.

Working with your financial planner and other professionals, you will need to determine how much money will be required to fund the trust. While basic living and medical expenses may be provided by government benefits, the trust will provide quality of life items, which may include personal attendants, rehabilitation and other costs.

One way to determine how much funding is necessary is to estimate current expenses related to the dependent and projected future costs, estimated inflation, along with his or her life expectancy.

After establishing the approximate size of the trust, the next step is determining the most appropriate method of funding it. One common way to fund a trust is with life insurance. Your financial adviser can help you choose the best type of insurance for this purpose. For example, if there are two caregivers (a mother and father) a “second to die” or “survivorship” policy, might be an option to consider.

A Special Needs Trust can also be funded with investments, retirement plans, real estate and other assets but you need to be careful not to deplete assets that you may need yourself. It’s important to assure your own financial well being for your lifetime if you are the caregiver. Regardless of the way you choose to fund the trust, you should review it regularly.

In addition to the financial plan for your special needs dependent, it is also important to meet with your legal advisor and draft a letter of intent with instructions to trustees and guardians outlining such issues as health care, education, housing and other items.

It is important to remember that in order to reach any financial goal, careful planning is required. For those who care for dependents with special needs, planning for the future is even more critical since failure to establish provisions could be detrimental to the person you want to take care of. Proper planning now is one way to help ensure the future of loved ones who are dependent on your care.

Jeffrey Apps and Tracy Tutag sell securities and investment advisory services through AXA Advisors, LLC (member NASD, SIPC), 1290 Avenue of the Americas, New York, NY 212-314-4600 and offers annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. They can be reached at 970.926.0601 or by e-mail at

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