North Carolina's First Elder Law Firm : Special Needs Blog

Time Often Changes Special Needs

It's spring 2008, and the Easter/passover holidays are early. Regardless, the beginning of spring for many is a time for renewal and taking care of those items on the "to-do" list long since over-looked.

Families that have teenagers with speical needs often have lists longer than most. What with all that must be done, those that are not urgent are pushed further down the list. One of those overlooked items is legal planning for those things not related to estate planning or even special needs trusts. Legal planning for the individual rights of challenged teens requires parents to decide if guardianship or powers of attorney may best serve how the teen will have access, connection and voice in the young adult years to come.

If the challenged child needs guardianship or conservatorship (depending upon the state), the parents should consult a special needs attorney in their area. The necessity of guardianship will depend on the severity of the physical and mental deficiencies that challenge the child. For many children, their mental function may be of sufficient threshhold that they have the ability to make informed decisions regarding their choice of agents under powers of attorney. See my future comments about challenged teens and powers of attorney. 

As for guardianship, the process maybe be started in many states as early as six months prior to the child reaching the age of eighteen. If the teen has no assests, including no gifts given under the Uniform Gifts to Minors Act (which I generally never advise), then the process is much easier with guardianship of the person. Many states have tried to offer forms that are user friendly for filing the petition and other documents. Even then, the Court will often appoint an advisor, visitor or guardian ad litem to represent the child.              

What is a Special Needs Trust

Part I: What is a Special Needs Trust (SNT) and How Does It Benefit Clients Seeking Governmental Benefits?

Before answering the SNT question above, let’s start at the beginning: What Is a Trust? A trust is a legal relationship in which the legal ownership of property is separated from the beneficial ownership of the property. In a trust, one person or group of persons (the trustee) holds money or other property (the trust principal or corpus) for the benefit of another person or group of persons (the beneficiaries). A trust may also be described as a fiduciary relationship in which one person is the holder of the title to property, subject to an equitable obligation to keep or use the property for the benefit of another.

Let’s move on to the primary question: What Is An SNT? Historically the SNT is a hybrid of the irrevocable discretionary trust. In the 1970s, parents of children with severe, chronic disabilities (primarily mental retardation) worked with trust and estates counsel to develop legal documents as vehicles that would not only provide for the transfer of funds for the benefit of their children with severe disabilities, but more importantly mandate to the trustees detailed instructions that addressed the quality of care and the quality of life of the children to be served by the trustee.

Now that we know what an SNT is, let’s look at what it does. The SNT vehicle takes unilateral, discretionary powers given to trustees for various situations and broadens the scope, expanding specifically how the trustee supplements the needs of the trust beneficiary. The SNT details how the trustee within his/her/its sole discretion administers the trust for the sole benefit of the beneficiary, providing health and medical provisions; social and educational programs and services; recreation, vacations and even trips abroad where appropriate; and institutional or group home transition and placement, promoting community based, least restrictive alternatives that would enhance the quality of life of the trust beneficiary.

Additionally, the SNT is developed as irrevocable and spend thrift in nature. The creator of the SNT develops language that bars any use of trust funds for services already provided to the beneficiary through federal and state programs. The SNT is exempt under federal and state agency regulations that consider such trusts appropriate as a matter of public policy.

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