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When should you set up a special needs trust?

Trusts are a key element of many people’s estate plans. Often they are used to put money or other assets aside for a child or grandchild until they reach a certain age or other milestone.

For people who have children or other family members with mental or physical disabilities, they can be used to ensure that they have the financial resources they need for their care and that no one can misuse those assets. These are called special needs trusts.

These trusts are often established to manage the beneficiary’s assets when they aren’t able to do so themselves. It can be a place to safeguard disability benefits, government assistance and/or the settlement from a lawsuit if someone was held liable for the person’s disability. If and when the beneficiary inherits money, that can be placed in the trust.

The trustee, or person who manages the trust, is often the person who set it up. However, another family member may be designated the trustee. If a family member isn’t able to be the trustee, a court will appoint a third party to take on the responsibility.

Of course, the primary advantage of a special needs trust is that your loved one’s assets are in a safe place where they can be used for medical care, therapy, education, home health care, residential care and other needs. They are under your control or that of someone you trust who won’t take advantage of the beneficiary. However, they have the added advantage of being untouchable should the beneficiary be sued for any reason.

Although special needs trusts all have some similarities, each should be designed to meet the unique needs of the beneficiary and to follow the rules of the state. An experienced California estate planning attorney can work with you to set up a special needs trust for a loved one and to help you ensure that the trust will remain in good hands even if that loved one outlives you.

Source: FindLaw, “Special Needs Trusts FAQs,” accessed May 12, 2016

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