Planning for the future may seem like a daunting task. If you have been putting off the estate planning process, you are far from alone. According to recent estimates, approximately 32 percent of Americans do not have an estate plan in place, which marks a 6 percent decrease from 2023. Those who were surveyed about why they have not taken steps to put an estate plan in place reported that procrastination played a significant role in this decision (43 percent), while 40 percent stated that they do not believe they have enough assets to justify creating an estate plan. However, the majority of Americans recognize that estate planning is important—they just have not taken the time to do so. It’s helpful to understand that estate planning is not just for high-net-worth individuals or people over the age of 60. Estate planning encompasses so much more than allocating your assets to your beneficiaries; younger adults can enjoy greater peace of mind when they create an Advance Directive For Health Care or set up a trust to protect and preserve their financial assets.
Moreover, those who have children or loved ones with special needs can set up a Special Needs Trust (SNT) to protect and support beneficiaries who may need additional guidance and assistance when managing their finances. Working with attorneys specializing in special needs trusts is a great way to obtain the customized legal guidance you need to ensure that the future remains secure and bright for you and your family. This post will explore some of the basics of special needs trusts in Washington state and how property ownership considerations can affect these estate planning tools.
What is a Special Needs Trust in Washington State?
There are several types of trusts that Washington residents can set up as part of their estate planning journey. Special needs trusts (SNTs) are designed to ensure that the beneficiary continues to receive needs-based government benefits such as Medicaid and Supplemental Security Income (SSI) while the trust assets can provide supplemental financial assistance. For example, you could set up an SNT to ensure that your loved one (the beneficiary of the SNT) receives supplemental financial support for costs not covered by needs-based government assistance, such as dental expenses, companions, sitters, or medical expenses that Medicaid, Medicare, or SSI does not cover. There are two main types of SNTs: First-party SNTs and third-party SNTs.
First-Party Special Needs Trusts in Washington
A first-party SNT, sometimes referred to as a “self-settled” trust, allows an individual with special needs to place their assets or income into the trust and also serve as the trust’s beneficiary. However, federal law states that the beneficiary must be under the age of 65 when the first-party SNT is established and funded and that Medicaid will be reimbursed once the beneficiary passes away (or upon the termination of the trust). Additionally, the first-party SNT must be administered for the sole benefit of the beneficiary. As long as these criteria are met, the trust’s assets will not count for Medicaid, SSI, or other needs-based government assistance purposes.
Third-Party Special Needs Trusts in Washington
The other type of SNT is called a third-party special needs trust (otherwise known as a supplemental needs trust). The funds for a third-party SNT come from a person other than the beneficiary. For instance, the parent of someone with disabilities or special needs may establish a third-party SNT and fund it with gifts, inheritances, or proceeds of life insurance policies. If you have questions about the formation of a special needs trust in Washington state, reach out to an experienced and caring Spokane estate planning lawyer for personalized legal guidance.
Can a Special Needs Trust Own Real Estate in Washington?
Finding safe and stable housing is a primary concern for those with special needs (as well as their loved ones). As you plan for the future of yourself and your family, questions like “Can a special needs trust own a house?” or “What types of assets can I place in a third-party SNT?” will likely arise. Some people decide to place real estate into a third-party SNT in order to ensure that their loved one with special needs holds this valuable asset to safeguard their future. In other situations, the parents of a special needs individual may decide to fund a third-party SNT with enough financial assets in order for the beneficiary to buy a home of their choosing. Regardless of the decision you make, it’s essential to consider how property ownership could affect the beneficiary’s eligibility for needs-based benefits. There are several considerations to evaluate when making such monumental decisions, so it’s important to consult with a caring and knowledgeable Spokane estate planning attorney who can help you understand your options and their potential advantages and drawbacks.
Start Planning for the Future Today
The prospect of estate planning can be intimidating, but it doesn’t have to be. In fact, those who have taken steps to put an estate plan in place often feel more stable and confident in the future, no matter what it may hold. We want to trust that our loved ones will receive the support they need should the unthinkable happen. Those of us who are growing older also want to know that our loved ones will be protected and financially secure once we are no longer here to look out for them ourselves. As you start to plan for your future, hiring a lawyer familiar with Washington state laws about SNTs is crucial for navigating the nuances of these estate planning tools, ensuring compliance, and safeguarding the best interests of the trust beneficiary. It’s never too early to start putting protections in place to protect your loved ones and your legacy.
Kristina Mattson Law is committed to serving clients with the care, respect, and compassion they deserve as they navigate complex legal decisions regarding estate planning, guardianships, probate, and more. Please call our Spokane, Washington office today at (509) 998-6629 to get started with an experienced and trusted estate planning attorney.
