Most families will use a lawyer to make a special needs trust. In many cases, the language of the special needs trust must be technical and precise. In order to keep trust funds from becoming the beneficiary's own property (and disqualifying the disabled individual from Medicaid), the trust document must include specific language required by federal and state regulations.
Special needs trusts also provide the opportunity to leave very individualized instructions about the individual's needs, as well as instructions for how trust funds can be used. An experienced lawyer will have the skills to include such details and instructions, without jeopardizing the integrity of the trust.
That said, in some situations, making a special needs trust without a lawyer is a reasonable choice.
Do-It-Yourself Special Needs Trust
Can you safely set up a special needs trust yourself? You can use a special needs trust form in certain situations. Consider the following:
- The type of trust you need. If you plan to fund the trust with the beneficiary's own money—money from an insurance or divorce settlement, for example—then you need to hire a lawyer because the rules for these "first-party" special needs trusts are complicated. However, if you want to make a "third-party" trust using money or property from someone other than the beneficiary, then making your own trust might be an option. (Very often, a parent or grandparent funds a third-party special needs trust with what would otherwise be the beneficiary's inheritance.) Learn more about First-Party vs. Third-Party Trusts.
- How much money or property will go into the trust. If you don't have much money to put into the trust, it may not be worthwhile to hire a lawyer. For example, it could make sense to make a special needs trust for a gift of $5,000—after all, that amount of money could provide the beneficiary with $100 worth of services every month for over four years. However, paying a lawyer $1,500 of that $5,000 to get a special needs trust would significantly diminish the benefit, so making a trust yourself might be a good choice. On the other hand, hiring a lawyer to make an individualized special needs trust for a gift of $50,000 would probably be money well spent.
- The feasibility of hiring a lawyer. If you can afford to hire a lawyer to write a trust designed to address the beneficiary's unique needs, you should. However, if you can't afford to hire a lawyer—so that your choices are either make a trust yourself or don't have a trust—your own untailored "bare-bones" trust is probably better than not having one at all.
- Your willingness to do some work. If you're going to make your own trust, you must be willing to do the leg work. That means spending the time and mental energy to do it right—making sure you're well informed and getting all of the details right. This kind of task is not for everybody. But if you meet the other criteria, and you're willing to spend the time and effort, making your own trust can work for you and your family.
- Other options. Pooled special needs trusts might be an option if you can't afford to work with a lawyer. Alternatives to special needs trusts, such as ABLE accounts, also exist.
If you're ready to make your own special needs trust or just want to learn more about how they work, read Special Needs Trusts, by Kevin Urbatsch. This book shows you how to leave any amount of money to your disabled loved one without jeopardizing government benefits. It provides plain-English information and forms that let you create a special needs trust by modifying your will or living trust document.
Learn more about Special Needs Trusts.