IRA ans Special Needs Help
I live in the Washington DC area and most of money is in IRAs or the government TSP. I have a son who is handicapped and receives SSI and SSDI and I would like to help him but it doesn’t help to give him IRA income that is then deleted from his SSI and SSDI payments. I have another son where this is not a problem but he also needs a lot less help.
I need an adviser who is both knowledgeable about Special Needs Trusts and IRAs. Any recommendations?
Jim
Permalink Submitted by Bruce Steiner on Mon, 2010-08-02 19:30
The trust for the son with special needs won’t be much different from the trust for the other son (if you choose to leave the other son’s inheritance to him in trust rather than outright). The existence of the trust isn’t the problem. Rather, a problem could arise depending on how the trustee uses the trust for the son with special needs. For example, the trustee could provide certain things for him that the government doesn’t provide, but can’t (without affecting his government benefits) give him cash distributions.
For the most flexibility, you can give the trustees discretion. You can provide guidance by saying that the trust is intended to supplement rather than supplant his government benefits.
The same issues arise with respect to nonretirement assets, though with retirement assets you have to also provide that none of the retirement benefits accumulated in the trust can ever go to anyone older than the person whose life expectancy is used to determine the stretchout (probably the older child).
For more on trusts as beneficiaries of retirement benefits, see my article on this subject in the March 2004 issue of BNA Tax Management’s Estates, Gifts & Trusts Journal: http://www.kkwc.com/docs/AR20041209132954.pdf.