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.