The Elder and Disability Law Firm, APC
Why special needs trusts can be beneficial
Special needs trusts may be an effective tool for parents or grandparents who are looking to care for a loved one. The trusts may be structured in a variety of different ways to help meet the needs of the beneficiary. Furthermore, the trust will be overseen by a trustee who will make decisions based on guidance provided by the document itself. This person may be a California resident or any other adult of sound mind.
Generally speaking, it is not a good idea to simply appoint an older sibling or other family member as a trustee. One of the key reasons why a trust can be effective is that it may help preserve a special needs individual's access to government benefits. If assets are held in a trust, they do not count toward the special needs individual's net worth.
Furthermore, any proceeds generated from the trust may not count as income. Therefore, a beneficiary can receive items from the trust and still receive Medicaid or housing assistance. As with any other type of trust, a special needs trust helps to allocate a family's money and other resources. It can also help to protect assets from creditor claims or from being taken in a divorce. If parents separate or otherwise end their marriage, such a trust may be required as part of the divorce settlement.
By using a special needs trust, it may be possible to have money from a life insurance policy or other sources overseen by a trustee. This helps to ensure that it is managed properly and that it is shielded from creditor or other claims. An attorney may discuss how to create a trust and structure it in a way that preserves the client's best interest.