3 Common Mistakes in Special Needs Trusts

Special Needs Planning

As part of Special Needs Law Month, our attorneys in Chapel Hill reviewed past posts that outline special needs law information in North Carolina. We have also created a list of common mistakes that families make when establishing special needs trusts for the benefit of a disabled loved one. Not only do these mistakes compromise a disabled individual’s legal rights and eligibilities, they ultimately result in unnecessary expenses.

In addition to the mistakes outlined below, we also offer recommendations for how to prevent or resolve these errors. Any type of trust, whether special needs or for other asset protection purposes, requires careful planning. Learn about all special needs trusts options available in North Carolina before establishing one for your loved one.
Insufficient maintenance. The living and care expenses for a beneficiary of a special needs trust will likely fluctuate throughout their lifetime. Without regular maintenance of a special needs trust through routine reviews and examination of the need for additional funding, the beneficiary may not have enough coverage to cover costs. Review funding options, such as life insurance, with a special needs trust attorney to avoid this mistake.
Incorrect titles. A properly drafted special needs trust is not a one-step solution for preserving a disabled person’s legal, financial, and medical interests. If assets have not been titled properly, they are not adequately protected and the individual with special needs may not be eligible for Medicaid, Social Security, or other government benefits. Filing correct titles of assets can be confusing for guardians and caregivers; this is best completed under the counsel of a lawyer.
Disinheritance. Disinheriting a child or dependent who has special needs under the belief that this will preserve the individual’s eligibility for public benefits only limits their options. Public benefits are typically not adequate in meeting both necessary care and quality-of-life expenses. Solution?Create a special needs trust, maintain it, and make sure assets are titled correctly.
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