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How Do I Set Up A Trust For My Special Needs Family Member In Ohio?

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Patricia J. Schraff - Elder Law - Super Lawyers

Answered by: Patricia J. Schraff

Located in Willoughby Hills, OHSchraff Thomas Law LLC

Phone: 440-499-6980
Fax: 440-569-1509

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Creating a special needs trust can be an important way to protect the financial future of a disabled family member. Yet, the process to do so can be complex and entirely dependent on your unique situation. You may feel uncertain about how to go about setting up a trust and whether it could even be beneficial for your loved one.

The first step in setting up a special needs trust is speaking with an attorney about your goals for your estate and how you wish to support your disabled child, grandchild or other loved one in Ohio. Your lawyer can help you create a plan that suits your needs and file the correct paperwork. It is also helpful to have a basic understanding of special needs trusts before meeting with an attorney so you can have an educated discussion about what is economically feasible for your family.

Three Common Types Of Special Needs Trusts

One barrier many face in deciding whether to set up a special needs trust is fear that the trust could interfere with their loved one’s ability to receive governmental benefits. However, it is important to understand that with proper planning, a special needs trust should not interfere with Medicaid, Supplemental Security Income (SSI), subsidized housing and other benefits. The beneficiary should continue to be eligible to receive these critical benefits while also receiving funds from the trust.

There are three basic types of special needs trusts: A third-party trust, a pooled fund trust and a d4A trust:

  • A third-party trust. This is often created by a parent or grandparent of a special needs individual and can hold a wide variety of assets, including a house, bonds, land and more. In most cases, it should not affect the beneficiary’s access to governmental benefits. Rather, it is often used to supplement those benefits. After the beneficiary passes away, remaining assets may pass to other family members or charities instead of reimbursing the government for that person’s care.
  • A pooled fund trust. This is usually established by a charity or group of individuals to pool their resources for investments. Then, a person with special needs may set up a pooled fund trust for themselves or a third party can set it up for an individual. Even though these funds are invested together, each individual’s account remains their own. This allows individuals with fewer resources to benefit from more stable investments.
  • A d4A trust. A disabled individual, parent, grandparent, guardian or court may create this type of trust. Often referred to as a first-party special needs trust, it can protect an individual’s assets while still allowing them to receive governmental benefits. An example of this would be if someone with special needs received money in a personal injury lawsuit after a car accident, they could put this compensation into a d4A trust to prevent it from interrupting their benefits.

Each individual’s needs are unique and may require a different approach in setting up the trust that can benefit them the most. Whether your goals are to pass down family heirlooms and an inheritance to your child or to protect your own governmental benefits, working with an attorney to identify the right type of trust for you can allow you to both retain and supplement such benefits.

What To Know About Setting Up A Special Needs Trust

Ultimately, creating a trust for a family member with special needs is an important way to protect their assets and enhance their quality of life. If you are considering setting up a special needs trust for yourself or someone in your family, start by having a good understanding of your assets, estate plan and the amount of care the beneficiary requires both now and in the future.

These trusts are complicated, and the cost of incorrectly creating a trust can be detrimental to the welfare of the intended beneficiary. An attorney can assist in creating a trust that works well for your situation, with the current and long-term interests of the beneficiary in mind.

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