Special Needs Planning

As parents we all want to provide for our loved ones. Therefore, it is important that we all have our estate plan in place in case of our deaths.  However, when you have loved one with a disability, it requires some additional specialized planning.  If you do not do the specialized planning, and simply have a "typical estate plan" or no planning, then your loved one will likely be disqualified from receiving their government monetary benefits - sometimes forever.  This could even happen when your loved one is given money from someone else, like say a grandparent.  Some examples of the benefits this type of planning can protect are: Supplemental Security Income (SSI), Section 8 housing, Food Stamps, Medi-Cal or Medicaid, ADA benefits, and more.  The specialized planning typically revolves around a Special Needs Trust (aka Supplemental Needs Trust).

This type of trust works by allowing your loved one to use the inheritance to supplement the government monetary benefits that he or she is already receiving, and it does not count when applying for further benefits.  In addition to the benefits that your loved one already received or is entitled to, if you were receiving benefits during your lifetime, the government may try to take those benefits back from your loved ones.  This specialized planning will also prevent the government from trying to take that back from your loved ones.

Another reason to do this special planning is for asset protection.  You can use this specialized planning to protect your beneficiary from being influenced or taken advantage of in matters concerning money.  Many people with special needs are easily taken advantage of, and unfortunately, there are many unscrupulous individuals who actually target people with needs.  By setting up a special needs trust, you can add a layer of protection to the money that protects against such predators.   In addition, the funds in a special needs trust are protected from creditors, legal judgements and lawsuits, and in divorce.

In all trusts, but even more importantly in a Special Needs Trust, choosing the right people to look out for your loved one when you are gone is critical.  You must choose someone you trust to act as the trustee to manage the assets for your loved one.  This trustee will be the only person (or if you use a committee of trustees, the only persons) that have access to the assets.  The individual(s) that you choose will have a legal obligation to use the inheritance only for the benefit of the loved one for whom the trust belongs to.  Sometimes you may need to also nominate someone to care for your loved one if their disability is such that they cannot fully care for themselves.  These decisions and many more are part of what goes into this specialized planning.  The choices can be tough to make, and even further complicated by the many legal ramifications of your choices.  If you think that you may need a special needs trust set up, or if you already have one and need it reviewed, please contact our office for more information.  We can help guide you through the tough choices to make sure the final planning achieves the result you desire.