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Special Needs Trust for Disabled Veterans

Writer's picture: Don DrakeDon Drake
Title graphic Connelly Law Offices, Ltd.
Connelly Law Offices, Ltd.
Attorney RJ Connelly III

"Veterans Day is designated to express gratitude and honor all individuals who have served honorably in the military, regardless of whether their service occurred during wartime or peacetime," stated professional fiduciary and certified elder law Attorney RJ Connelly III. "Common perceptions of veterans often focus on those from the Vietnam War or earlier conflicts, frequently neglecting to consider those who have served in more recent operations, including those in Iraq and Afghanistan, as well as those currently deployed in various global regions."


"Many returning veterans face significant long-term disabilities and mental health challenges," Attorney Connelly continued. "A significant number of these brave individuals, many still in their twenties and thirties, find themselves navigating life without the support of a partner, often relying on the assistance of parents and other family members as they attempt to transition back into civilian life after facing disabilities. They grapple with a range of profound and life-altering challenges, including post-traumatic stress disorder (PTSD), traumatic brain injuries, physical disabilities, and mental health issues like depression and anxiety."


"Such debilitating conditions can create barriers that make daily life overwhelming, affecting tasks like managing finances, grocery shopping, and securing steady employment. Modest savings or assets can also limit access to vital government assistance programs like Supplemental Security Income (SSI) and Medicaid. In such cases, exploring options like a special needs trust can help protect financial stability while ensuring essential care and support through needed government benefits."


What is a Special Needs Trust

A special needs trust is a legal framework established to benefit individuals who are physically or mentally disabled or who endure chronic illnesses," said Attorney Connelly. "This trust structure facilitates the receipt of income for these individuals without jeopardizing their eligibility for vital public assistance programs, including Social Security, Supplemental Security Income (SSI), and Medicaid."


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A special needs trust provides a safety net

Within this arrangement, a grantor initiates the trust and appoints a trustee tasked with managing the trust's assets and overseeing fund distribution. The beneficiary is the individual for whom the trust is created, ensuring their needs are adequately addressed while preserving their access to governmental benefits. A special needs trust for disabled veterans is an effective strategy for providing financial support to individuals in need while ensuring adherence to public assistance programs' income and asset limitations.


"This type of trust can cover various expenses that public assistance payments may not encompass, such as medical costs, caretaker services, technology, and transportation expenses," Attorney Connelly emphasized. "The grantor designates a trustee responsible for managing the trust and disbursing funds to fulfill the beneficiary’s needs. A special needs trust constitutes an essential financial safety net, allowing beneficiaries to receive support without endangering government benefits."


Disabled veterans or their family members are encouraged to consult with an elder law attorney specializing in special needs trusts to protect all available veterans' benefits. Proper planning and expert legal advice can substantially enhance the benefits accessible to low-income disabled veterans by strategically implementing a special needs trust.


The Military and Post Service Support

To protect their financial future, veterans might consider establishing a special needs trust, particularly if they rely on need-based benefits. The Department of Veterans Affairs (VA) manages two main programs: Veterans Disability Compensation, which is not based on financial need, and Veterans Disability Pension, which is intended for low-income veterans who are permanently and totally disabled.


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Our vets deserve a secure and stable life

These military benefit programs support disabled veterans, though these often come with specific limitations," said Attorney Connelly. "The Veterans Disability Pension Benefit, aimed at low-income veterans, operates on a need-based model, requiring veterans to meet certain income and asset guidelines. Failing to do so can result in losing critical financial resources, which can be especially tough for those whose pensions do not cover basic living expenses."


This benefit is contingent upon personal circumstances and household dependents and can be impacted by the income of other household members. Those who qualify can also access free healthcare services from VA hospitals, including medical care and medications. Additionally, the pension program provides aid and attendance benefits to assist with caregiver costs.


Eligibility for the pension requires veterans to demonstrate that their income and assets meet specific thresholds. The financial status of a veteran's spouse and dependents also influences eligibility. By understanding these requirements and seeking expert guidance from an elder law attorney or special needs attorney, veterans can more effectively navigate the system and secure the benefits they deserve, ensuring a stable and dignified quality of life despite their disabilities.


Remember, it is important to recognize that estate planning laws can vary significantly across different states, influencing the structuring and enforcement of wills, trusts, and other associated documents. Consequently, consulting with a qualified elder law or special needs attorney is strongly advised. These professionals represent a valuable resource, as they possess the expertise necessary to navigate the intricate regulations specific to each state. Their guidance can help customize your estate plan or trusts to reflect your circumstances, ensuring your intentions are honored, and your loved ones are adequately protected.


A Final Thought

"Veterans with disabilities or their caregivers may consider setting up a Special Needs Trust (SNT) or Supplemental Needs Trust to improve their quality of life while protecting access to Supplemental Security Income (SSI), housing and Medicaid," stated Attorney Connelly. "Choosing the trustee carefully is vital, as they will have sole discretion over distributions. To maintain SSI and Medicaid eligibility, the trustee must have absolute discretion; if a beneficiary can demand distributions, the trust could count as available assets, jeopardizing benefits."

Connelly Law Offices, Ltd.

Please note that the information provided in this blog is not intended to and should not be construed as legal, financial, or medical advice. The content, materials, and information presented in this blog are solely for general informational purposes and may not be the most up-to-date information available regarding legal, financial, or medical matters. This blog may also contain links to other third-party websites that are included for the convenience of the reader or user. Please note that Connelly Law Offices, Ltd. does not necessarily recommend or endorse the contents of such third-party sites. If you have any particular legal matters, financial concerns, or medical issues, we strongly advise you to consult your attorney, professional fiduciary advisor, or medical provider.

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