Two of the most important pieces of federal legislation enacted in recent years—the American Taxpayer Relief Act (ATRA) and the Patient Protection and Affordable Care Act (ACA)—have dramatically impacted estate planning for those who care for a loved one with special needs. While each law has a separate and significant effect on this area, together they call for no less than a fundamental change in the way we design solutions for these clients.
Planning for a beneficiary with special needs almost always involves the implementation of a supplemental or special needs trust (SNT), the administration of which requires an inexact balancing of several factors: establishing or maintaining eligibility for government benefits; maximizing the beneficiary’s quality of life; granting the beneficiary the appropriate level of financial control; protecting assets from creditors; and minimizing income and estate taxes. Due to a historical lack of health care options for beneficiaries other than Medicaid enrollment, maintaining the beneficiary’s eligibility for this program is often a primary goal of the SNT.
