It can be hard to know what kind of legal and financial help your disabled loved one needs. A Special Needs Trust (SNT) is a useful tool that can give you peace of mind and long-term security. I am a special needs trust lawyer in Arizona, and I often help families make sure that their loved one is safe now and in the future, both legally and financially. Read on to find out more.
What Is a Special Needs Trust?
A Special Needs Trust is a formal plan that lets a disabled person get money without losing their ability to get government benefits like Supplemental Security Income (SSI) and Arizona Medicaid (AHCCCS). People who are in these public programs can only have a certain amount of money and property. Someone could miss out on these important services by mistake if they got an estate or a gift of money.
Putting money into a Special Needs Trust means that the disabled person no longer owns that money. Instead, a designated trustee manages the money for the beneficiary’s benefit, providing for supplemental needs like:
- Medical and dental care not covered by insurance
- Education and tutoring
- Transportation
- Recreational activities
- Personal care attendants
- Assistive technology
Why Create a Special Needs Trust?
There are many good reasons why families in Arizona should think about setting up a Special Needs Trust.
1. Preserve Eligibility for Benefits
Someone who doesn’t have a trust might not be able to get important state benefits if they get a small gift. A Special Needs Trust makes sure that the help you give doesn’t make you lose your AHCCCS, SSI, or rental assistance.
2. Provide Long-Term Financial Security
A Special Needs Trust makes sure that your loved one will always have access to things that will make their life better, both now and after you die. It helps you save money in a safe and organized way.
3. Maintain Control and Oversight
You pick a manager to take care of the assets in a way that works for you and your loved ones as the person who sets up the trust (the “grantor”). You could also tell them exactly how to spend the money.
Types of Special Needs Trusts
There are three main types of Special Needs Trusts, and the one that’s best for you will depend on your needs:
1. First-Party Special Needs Trust
The beneficiary’s own money (like a personal injury settlement or gift) pays for it. This type of trust has to have a payback clause, which says that any money left over after the heir dies must go back to Medicaid.
2. Third-Party Special Needs Trust
Gifts from family members, such as parents, grandparents, or other family members, that are not the recipient. Medicaid doesn’t have to pay back this kind of trust, which makes it great for planning your estate.
3. Pooled Trust
A nonprofit group runs a shared trust that invests money from a lot of beneficiaries. Each beneficiary’s money is kept in its own account. People often use it when they need or want a professional manager.
Arizona-Specific Considerations
Arizona law is mostly the same as federal law when it comes to Special Needs Trusts. But there are some things to remember about the area:
- Arizona’s Medicaid has strict limits on assets. People who are on ALTCS (Arizona Long-Term Care System) can only have $2,000 in assets right now.
- It’s very important to work with a lawyer who knows the Arizona Trust Code, which tells you how to set up, run, and understand trusts.
- Some Arizona courts may need certain wording or court approval for first-party SNTs.
Do You Need an Attorney?
Although it is feasible to create a trust using online forms, doing so can be dangerous, particularly in Arizona where public benefits and trust regulations are intricate and constantly evolving. A poorly drafted trust may result in no benefits or even legal action.
A knowledgeable special needs trust attorney in Arizona can:
- Assist you in selecting the appropriate type of trust
- Write a legal document that complies with the guidelines.
- Make sure your overall wealth plan includes your trust.
- Assist you in determining the best way to fund the trust.
- Assist with continuing trust administration
Planning Ahead Is a Gift of Love
Creating a Special Needs Trust is more than a legal step—it’s a profound act of care and foresight. It means your loved one can enjoy a better quality of life while maintaining the safety net they rely on.
If you’re ready to talk about how to secure your family member’s future, I’d be honored to help.
Need Help Creating a Special Needs Trust in Arizona?
Contact our office today to schedule a consultation. Let’s build a plan that supports your loved one—today and for years to come.
