We purchased a Special Needs Trust. We are setting up a bank account for the beneficiary and need to know if the account is set up in the Beneficiaries name or the Trustee’s name. The trustee will be the only person able to access the account.
The bank account held in trust is typically titled in the trustee’s name. For example, if John Doe is the trustee for Jane Smith’s trust, the bank account is titled, “John Doe, Trustee of the Jane Smith Irrevocable Trust.”There are very strict requirements that must be followed in drafting and administering Special Needs Trusts in order to have the intended effect of qualifying the beneficiary for need-based benefits. Depending on the source of the trust funds, some special needs trusts must be court-approved and age restrictions may apply. Filing requirements depend on the type of trust involved. For example, if the person with disabilities is receiving SSI, a Self-Settled Special Needs Trust should be filed with the Social Security Administration. Special Needs Trusts are complex because they involve state and federal government benefit laws and regulations as well as trust laws. I suggest you contact a local attorney who can review all the facts and documents involved.
If the trust is intended to supplement, rather than replace, government benefits, it must be properly drafted. Although requirements vary according to state law and the type of trust being established, some general rules include:
• Generally, only a parent, grandparent, legal guardian, or court can set up a special needs trust. The disabled person, no matter how competent, cannot be the “creator” of the trust (even if the trust is funded by his or her personal assets).
• Funds may not be available to the disabled beneficiary.
• The beneficiary cannot revoke the trust.
• The individual with special needs must be considered “permanently and totally disabled” under SSI criteria. Different rules apply to adults and children.
• Under the terms of the trust, the trustee may not be allowed to make payments or distributions that might interfere with government benefit eligibility (e.g., distributions cannot be made directly to the beneficiary).
• Special needs trusts may be created as part of a will or during the creator’s lifetime.
• Special needs trusts have no limit on the amount of funds included and can be added to at any time.
