No parent wants to think about dying and leaving their dependent children behind. Worrying about whether your child will be cared for is normal. For parents of special needs children or guardians of special needs adults, however, the concern about how their loved one will be cared for after they pass is even more pressing. If you have financial or personal responsibility for the needs of a special needs individual, talk to an estate planning attorney at OC Wills & Trust Attorneys in Orange County, California, about establishing a special needs trust.
Estate Planning and Special Needs Trusts in Orange County, CA
A special needs trust differs from other types of trusts in its purpose and parameters. Special needs trusts financially provide for people who are unable to care for themselves independently while preserving their government benefits (such as Medicaid or subsidized assisted living accommodations).
Depending on your special needs ward’s level of independence, they may not be able to establish their own home independently, or they may need long-term accommodations in a care facility or services from an in-home caregiver or nurse.
If you have a dependent with special needs and wish to leave assets to ensure they are cared for after you pass, a carefully constructed Special Needs Trust (SNT) is a better option than a traditional trust or leaving money or property to them in your will.
Without an SNT in California, your loved one’s eligibility for government benefits, including healthcare and a Medicaid waiver for assisted living or similar group housing, may be jeopardized. If you leave money in your will to care for your loved one, the state considers this income, which may disqualify the individual from benefits.
While a trust is a slightly better vehicle, an ordinary trust does not cover the breadth of issues that could arise over the course of your special needs dependent’s life.
Administering a Special Needs Trust
As you work with your estate planning attorney to set up the SNT for your loved one, consider the trustee very carefully. The trustee has a fiduciary obligation to administer the trust responsibly and ensure that all its terms are met, including specifics of how your loved one will be cared for and where they will live.
Furthermore, a trustee may have to deal with other interested parties, such as other beneficiaries of your estate or creditors of the estate. These parties may be eyeing that SNT, so your trustee will have to ensure that they are capable of protecting the trust so that it serves the purpose of caring for your loved one.
Trustees who may not understand their financial obligations, such as property appraisals or trust accountings, may mismanage the trust. This can have negative implications for the beneficiary, who depends on the trust’s funds, and the trustee, who may face legal charges for mismanagement.
Protecting a Loved One With Special Needs
Without a purposeful SNT, any money, property, or other assets bequeathed to someone who receives Medi-Cal, SSI, SSDI, or other government benefits will render that person ineligible to continue receiving those benefits. Until they spend enough of the money left to them to re-qualify for the benefits, they will not be able to re-apply.
If your gift is large enough to care for your loved one for the rest of their life, losing their government benefits should not matter. However, many people don’t have the money to provide so generously.
Losing benefits can mean more than just switching health insurance or not having the SSDI monthly stipend. Many special needs individuals may rely on a Medicaid waiver for their housing or in-home health care. Without these benefits, they may no longer be able to afford these services on their own, especially if the money they now have puts them over the income threshold to qualify for benefits but not enough for monthly assisted living or group home fees.
In the 1970s, California created a new supplemental trust, which later evolved into the Special Needs Trust many states use today. The key difference between this type of trust and other trusts is that the beneficiary has no power to directly use the trust assets for their own maintenance and support, nor may they revoke the trust.
While the assets in the trust may be used for the beneficiary’s care, the SNT administrator has to ensure that the assets are used properly and invested wisely, not the beneficiaries. This stipulation about the trust’s governance allows the beneficiary to retain their SSI and other benefits.
Contact an Orange County Special Needs Trust Attorney Today
Do you need to establish a Special Needs Trust for a loved one or dependent? We can help. When you partner with OC Wills & Trust Attorneys in Orange County, CA, an estate planning attorney will consider your financial situation and goals and work with you to create the right estate planning documents.
