Families with special needs individuals should take extra measures during the estate planning process to ensure that their special needs family members will be cared for after the responsible party’s death. Special needs trusts are an important tool to ensure that this happens.
All About Special Needs Trusts
A special needs trust is a legal arrangement designed to protect and manage assets and offer financial stability to a person with special needs. You can provide for your special needs loved ones without causing them to lose eligibility for government benefits and assistance programs.
These trusts are vital because they help ensure that individuals with special needs receive the necessary care and resources, even after their parents or guardians pass on.
Various types of special needs trusts are available, each with unique aspects and requirements.
- A first-party or self-settled special needs trust is funded by an inheritance or a personal injury settlement that is in the name of the person with special needs.
- Third-party special needs trusts are created and funded by someone other than the individual with special needs, such as a parent or grandparent.
- Pooled special needs trusts are managed by nonprofit organizations and are a suitable option for individuals with smaller assets or individuals who cannot set up a first-party special needs trust.
The trust will bring value and peace of mind to parents and family members who want to see the individual with special needs live a comfortable, safe, and healthy life.
Setting up a special needs trust requires careful planning. Here are some important factors to consider:
- Choose a Trustee: Select someone trustworthy, reliable, and knowledgeable about the complexities of special needs planning. They should always have the beneficiary’s best interest in mind.
- Determine the Funding: Contribute assets, set up insurance policies, and take into account future donations to prepare for the long-term care of the individual with special needs.
- Understand Government Benefit Eligibility: Set up parameters and disbursement schedules to maintain eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI).
- Provide Detailed Instructions: Divide the trust funds into clearly outlined categories like provisions for housing, education, healthcare, and entertainment. The trust should be flexible enough to adapt as time goes on.
At Shoup Legal, we specialize in estate planning and maximizing the benefits of trusts, including special needs trusts. Our experienced team can guide you through the process. Contact us at (951) 445-4114 or email us at [email protected] to start planning today for peace of mind tomorrow.