WHAT TO CONSIDER WHEN CREATING A SPECIAL NEEDS TRUST
May 24, 2019
Setting up a trust can allow individuals with special needs in California to retain government benefits while also receiving assets from family members. Those who have assets of more than $2,000 may not be allowed to participate in programs such as Medicaid. However, money or other items inside of a trust are owned by the trust as opposed to the beneficiary.
Trusts may be funded by a parent or money received in a lawsuit. It can also be funded by insurance payouts or by funds that were inherited when a parent or grandparent passed away. Ideally, the trust will start with at least $100,000. This amount can make it easier to cover costs related to setting up and maintaining the trust. While a friend or family member may act as a trustee for free, banks or other financial institutions will generally charge a fee to handle this task.
Prior to setting up a trust, it is important to determine how it will be structured. Families looking to create trusts for their children will usually make a third-party trust. Ideally, they will be made with the help of an attorney and a financial adviser. The financial adviser can help to make sure that funds are accounted for and that nothing happens that could jeopardize access to government benefits.
With a special needs trust, parents can help make sure that their children will be cared for after they are gone. The trust can hold both cash and other assets that produce revenue. An attorney might be able to serve as a trustee or otherwise assist in creating such a document. If there are any problems related to the way the trust is structured or with a trustee's actions, an attorney could help find a solution.