As the attorneys at the Schomer Law Group can assure you, trusts are quite helpful in estate planning. They provide a useful way to set aside assets for a chosen beneficiary for future use. There are specific trusts that serve specific purposes like ensuring future support for a loved one with special needs. The trustee you select will then manage and safeguard that proper and will only make it available to that person once the provisions of the trust document have been met.
What Does the Term “Special Needs” Refer to?
“Special needs” is a broad term that includes services related to health care, as well as, a wide variety of other medical-related services the purpose of which is to improve the quality of life of the beneficiary. Once the medical needs of the beneficiary have been taken care of, the special needs trust can continue to provide additional services like helping with daily living activities. Another important benefit is providing relief for the primary caregiver of the individual with special needs.
How does a special needs trust work?
The goal of a special needs trust is to provide future care for someone with special needs if the caregiver even becomes unable to continue providing that care. The special needs trust contains the funds and/or assets that are necessary for the continuation of care.
A special needs trust must be irrevocable in order for it to work properly. This means the trust cannot be modified or revoked once it is executed. That also means the assets secured by the trust cannot be accessed by creditors or legal judgments. One of the primary benefits of a special needs trust is that the assets included are not counted as financial assets for the purpose of determining eligibility for government benefits. This is especially important for individuals with special needs who often require those benefits.
Types of Special Needs Trusts to Consider
There are two types of Special Needs Trusts you can consider using, depending on your goals or the needs of your loved one. A General Support Special Needs Trust is most often used as the primary source of benefits for someone with special needs. On the other hand, a Supplemental Care Special Needs Trust is considered the secondary source of support after all government benefits have been exhausted. The most common type is the Supplemental Care Special Needs Trust.
Deciding Which Type of Trust You Need to Create
Deciding which type of special needs trust you may need to create for your loved one requires that you consider several issues. For example, to whom do the trust assets belong and will those assets be sufficient to cover the full cost of the beneficiary’s support and care. If those assets will be sufficient, then the best choice is probably a General Support Special Needs Trust.
On the other hand, if the principal source of funding will be need-based government benefits, then you should likely choose a Supplemental Care Special Needs. When you are ready to choose a trust, let our estate planning lawyers help you make that decision.
How Special Needs Trusts are Established
A Special Needs Trust can be established during the lifetime of the caregiver, as well as, through the last will and testament. The trust becomes effective when it is signed and notarized by the grantor (the person creating the trust). A tax identification number is required from the IRS. Then a bank account can be opened with a minimum deposit. After that, the trust can be funded through a variety of estate planning tools.
Who Should be the Trustee of a Special Needs Trust?
In most cases, the person creating the trust will name themselves as trustee. There should also be a successor trustee identified to take over the trust in case the initial trustee becomes incapacitated, resigns, or passes away. Trustees are legally required to follow the terms of the trust document, which includes using the property only for the benefit of the person with special needs.
How Do You Fund a Special Needs Trust?
A Special Needs Trust can be funded in various ways, including by a parent, relative or other third-party. The trust can also be funded using the beneficiary’s own assets, in which it is considered a “self-settled” Special Needs Trust. Federal law requires that a self-settled Special Needs Trust reimburse Medicaid for benefits provided, when the beneficiary dies, from the remaining property in the trust. Our estate planning attorneys can help you with funding your trust properly.
Join us for a FREE seminar today! If you have questions regarding estate planning, trust contests, or any other trust administration issues, please contact the Schomer Law Group either online or by calling us in Los Angeles at (310) 337-7696, and in Orange County at (562) 346-3209.
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