Leaving money or property to a loved one with a disability can be a major problem to them if you do not plan well. The usual benefits they get from the government such as Supplemental Security Income (SSI) and Medicaid benefits might be taken away from them, seeing that they are now entitled to a trust fund. This may sound a bit absurd, but that is exactly what can happen if you do not plan very well. The question now is this; “how do you plan well to avoid creating problems of such nature for your disabled loved ones?” The answer is simple, get the assistance of an expert Special Needs Trust Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the entire San Fernando Valley, and create a special need trust in your will.
What is a Special Need Trust?
A special need trust is a legal arrangement made on behalf of a person with special needs (the beneficiary) to enable him or her receive government benefits while still receiving support from the trust. For your loved ones not to lose their eligibility to SSI or Medicaid, creating a special needs trust for them is the way to go. In creating a proper special need trust, there are three parties involved:
SSI and Medicaid
- The donor: This person is the source of the fund.
- The trustee: This is the person that is appointed to take care of the fund, and administer it according to the donor’s instructions.
- The beneficiary: This is the person who receives the fund from the trustee as directed by the donor.
Ordinarily, a person with special need is entitled to Supplemental Security Income (SSI) and Medicaid. The SSI is a program funded by the government to support people with special needs and low income. Medicaid is a government program that supports low-income individuals in footing their bills for long-term medical or custodial care.
The Importance Of Special Need Trust
From my years of experience as a Special Needs Trust Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the entire San Fernando Valley,
this type of trust guarantees the beneficiary’s access to government aid as well as the trust. This is the major reason why it is important to set up a special need trust. Reasons one should set up a special need trust are:
Types Of Special Needs Trust
- If the fund is exhaustible, it would not leave the beneficiary stranded. With a special needs trust, the beneficiary still has government support to fall back on if the fund is exhausted.
- At the event of death of the donor, the fund/benefit still carries on, with respect to the agreement of the trust. Special needs trust adheres strictly to the terms and conditions of the agreement. As long as it is not against the agreement of the trust, the beneficiary is expected to continue benefitting from the fund.
There are three different types of special needs trust. They are:
The first-party trust:
- The first-party trust
- The third-party trust
- The pooled trust
When a person with special needs gain assets/properties through inheritance or accident settlements, he or she can opt for a first-party trust. Any special need person who has more than two thousand dollars is not allowed to enjoy the benefits of SSI or Medicaid; except he or she places the assets into a first-party special need trust (or any other suitable type of special needs trust). This trust must be created by any of the beneficiary’s parents, grandparents or the court. A beneficiary cannot create this trust for himself, irrespective of the fact that he or she is the source of the trust. The beneficiary stands to benefit all there is to benefit in his life time; while in the event of death, whatever is left in the account is used to reimburse the government for his or her medical treatments.
In a case where family members decide to help a person with special need, the third-party trust is the type of trust to go for. This help can come in any form/investment. A beneficiary enjoys the third-party trust as long as he or she does not have more than $2000 at a time, just like other types of Special need Trust. The interesting thing about the third-party trust is that the family or charity gets whatever is left in the beneficiary’s trust in the event of death of the beneficiary. The government does not get any reimbursement from the third-party trust.
This type of Special needs Trust is much more similar to the first-party trust. This type is usually opted for when the beneficiary cannot afford the first-party trust. Usually, a non-profit organization sets up a pool trust into which beneficiaries can transfer their excess funds as they benefit from the government support. A person with special need can, on his or her own, transfer excess fund to this trust. The non-profit organization sets up solid investments with these resources and provides better management services for the beneficiary. On the event of the death of the beneficiary, certain percentage of the funds are transferred to the government for the reimbursement of the beneficiary’s medical care, while the other percentage goes to the non-profit organization.
Who Can Spend From The Special Needs Trust?
Do you remember the trustee? The one that has authority to control the trust in accordance to the donor’s will? He is the only one that is allowed to spend money from a special-need trust. To give money to the beneficiary would mean to risk his/her ability to benefit from government support. Government support covers basic amenities, while the special needs trust funds are spent on things like education, recreation, vacation, house furnishing, care attendants, etc.
How To Create A Special Needs Fund
You can create a special needs trust for yourself with proper guidance, but it is far better to leave these matters for the Special Needs Trust Attorney Los Angeles, Woodland Hills, Encino, Tarzana, Chatsworth and the entire San Fernando Valley
seeing he has the proper knowledge and qualification to handle such matters. But just in case you decide to create a special needs trust for yourself and by yourself; do equip yourself with relevant materials.
For all your special needs trust related matters, the Leventhal Law Group, P.C offers free and no obligation consultation with a qualified attorney. Call 818-347-5800 for a free consultation today!