Trusts are created for the purpose of protecting certain assets that you may want to leave for your heirs, but want to make sure they are used for whatever purpose you have in mind. A common example is money set aside for grandchildren when they reach a certain age. Trusts can also establish how the money can be used when they finally obtain it. Trusts are essential estate planning tools.
A “Special Needs Trust” is a specific type of trust for the benefit of someone who is disabled. It is necessary to plan for the future care and needs of a disabled loved one in the even the caregiver is no longer available to continue serving in that role. There are numerous benefits in creating a Special Needs Trust. They are irrevocable, which means they cannot be canceled. They are also not subject to lawsuits or creditors.
Two Types of Special Needs Trust in Los Angeles California
Since the purpose of a Special Needs Trust in Los Angeles California is to provide for future care and support of the disabled, the type of trust you need to establish depends on the type of care and/or support that needs to be provided.
A General Support Special Needs Trust is usually considered the primary source of benefits for the disabled individual. Regrettably, assets included in this type of trust can potentially be used to disqualify the beneficiary from receiving need-based government benefits, such as Medi-Cal. The most common type of Special Needs Trust is for Supplemental Care. These are meant only to provide secondary support after government benefits have been exhausted.
What kind of benefits are usually included?
Special Needs Trusts are very customizable. That way, each trust can fit the specific needs of your disabled loved one. The term, “special needs,” is to be interpreted in a very broad sense. Benefits can include medical treatment and services, as well as services that improve the quality of life for the disabled. A Special Needs Trust can arrange for domestic services which assist in daily life activities, education and training. Benefits can also include service animals, living arrangements, and respite care for the primary caregiver.
How are Special Needs Trusts established?
A Special Needs Trust can be created in several ways: through family members, the court system, or non-profit organizations. Parents can establish a Special Needs Trust through funds provided in their will or funds from a life insurance policy. However, money from a Special Needs Trust cannot be used to purchase food, clothing or housing. Otherwise, SSI and Medi-Cal benefits may be significantly reduced or even eliminated completely. Also, it is important to know that if a disabled person receives an inheritance or court settlement, the court will order that a Special Needs Trust be created for those funds. This trust will be different from any trust established for support and care, because the assets will actually be owned by the disabled individual.
Special Needs Trusts are complicated legal instruments. They must be worded properly to be considered valid. Therefore, you should consider consulting an experienced estate planning attorney to establish your Special Needs Trust in Los Angeles California.
- What Can I Do to Prevent Probate Disputes After I Am Gone? - June 1, 2023
- Understanding and Manipulating Estate and Gift Taxes - June 1, 2023
- What It Means to Disclaim - June 1, 2023