If you or a loved one has a significant disability, you may have heard of a special needs or supplemental needs trust. This unique legal structure is set up to hold assets for the benefit of a disabled individual without disqualifying them from income-sensitive government programs. As with any trust, assets will be legally owned by the trust and managed by a named trustee who will be responsible for making disbursements. Special needs trusts can be funded with assets which belong to the beneficiary or which he or she is entitled to received. They can also be created and funded with resources from a third-party. Here are four reasons to consider a special needs trust for your situation:
1. They Can Improve Quality of Life
When someone relies on public benefits, they often have just enough to cover their most essential needs, but nothing extra. Having a special needs trust means the beneficiary can have things which make their lives more enjoyable and comfortable. The trust payments can pay for expenses such as transportation, entertainment, travel, education, medical costs not covered by Medi-Cal, therapy services, home furnishings, internet and cable services, gym memberships and housekeeping services. Having these and other expenses covered can help provide a better quality of life for the beneficiary.
2. They do not Require Excessive Wealth to Create
A common misconception is that you have to have a great deal of personal assets to create a special needs trust. While having extensive resources to fund the trust is undoubtedly helpful, having less to work with will not necessarily keep you from creating a trust. Loved ones often set up special needs trusts over time through gift-giving, estate planning, and other resources. If you want to set up this type of trust but are not sure about funding sources, talking with an experienced special needs trust attorney could help you understand your options.
3. They be Part of Your Estate Plan
As you plan for your estate, one of your primary goals will probably be leaving your assets in a way which minimizes your heirs' tax burdens and helps them avoid probate. If you wish to pass something of value on to a disabled loved one, directing his or her inheritance to a special needs trust, will allow them to receive the intended benefit of your gift without endangering their government assistance. Further, when assets pass to heirs through trusts, they bypass probate and are not typically subject to certain taxes.
4. They can Protect Assets
Often going through a divorce or having problems with creditors can mean risking assets. Depending on how your property is held, a divorce court could award part of an asset to your former spouse. This can be a real problem when the asset was intended to provide for a disabled loved one. Likewise, you could have issues with creditors trying to seize your property to satisfy debts. These situations can happen quickly, so it is better not to wait to place assets into your loved one's special needs trust. When a special needs trust is created in a certain manner, outside of fraudulent circumstances, assets within the trust will be unreachable for purposes of divorce or debt collection.
At the Law Office of Alice Salvo, we understand the issues which can arise when creating a special needs trusts and can help you evaluate your circumstances and make informed decisions. Contact us today for a free consultation. https://www.salvolaw.com/