When preparing for the future of a child or family member with a disability, many parents and guardians plan to set up a special needs trust.
This unique kind of trust can provide for many of the supplemental needs of a disabled person without jeopardizing that person’s eligibility for vital government benefits, including Medi-Cal and Supplemental Security Income. However, few know that there are concrete benefits to setting up such a trust sooner rather than later.
Start growing now.
When parents or grandparents set up and put money into a special needs trust during their own lifetimes, it can start to grow immediately. From the time the trust is established, anyone can contribute to it – uncles, godparents, friends – creating an especially beneficial way for loved ones to contribute to your child or family member’s future.
Ensure that the trust has the most beneficial structure.
Some special needs trusts, especially those created for assets already belonging to the beneficiary, mandate that funds remaining in the trust after the death of the beneficiary must first go to pay back Medi-Cal for all expenses covered during the beneficiary’s lifetime. When a trust is set up within the parents’ lifetime, by contrast, it can be established before any assets pass on to the beneficiary. A correctly drafted third-party special needs trust need not have a payback provision.
Give yourself time to change the trustee(s) or remainder beneficiaries.
The administration of a special needs trust can be complicated. Many parents or guardians entrust this responsibility to a professional trustee, who can ensure proper disbursement that does not endanger benefits eligibility. Other parents select a family member. Regardless, a properly constructed third-party special needs trust can give parents the flexibility to change trustees over time as needs change.
For more than 30 years, Gilfix & La Poll Associates LLP has innovated creative legal solutions to help you manage and plan the future of your estate. To contact an estate planning lawyer or call (800) 244-9424.
For a copy of Michael Gilfix’s guide, Special Needs Trust Creation and Management, visit the same website or call the number above.