You may find yourself with a myriad of unanswered questions as you begin your estate planning journey in Orange County, California. Estate planning is an essential process everyone should take on eventually, but it can be of particular importance for parents and guardians of special needs individuals. This is where a special needs trust (SNT) comes in.
At OC Wills & Trust Attorneys, our attorneys can help you ensure your special needs loved one’s safety, health, and financial security during your life and long after you’re gone. Contact OC Wills & Trust Attorneys today to learn more about our services.
What is a special needs trust?
A traditional trust is a legal provision in which a person or financial institution, known as the “trustee,” manages the assets of another individual, known as the “beneficiary.” A comprehensive trust document should outline the following:
- The trustee’s managerial authority and duties
- The ways in which the trust will aid the beneficiary
- The time and manner in which the trust will dissolve
A special needs trust differs from a traditional trust in that it takes into account the government benefits that special needs individuals receive. These benefits include Medi-Cal, SSI, SSDI, and others offered to individuals with special needs.
Without a cohesive, all-inclusive special needs trust, any assets given to a special needs beneficiary can render them ineligible to continue receiving government aid.
Special Needs Trust Legal Obstacles
If your trust is large enough to take care of your special needs dependent’s requirements for the rest of their life, whether your dependent loses their government-funded help may not be a crucial concern. Unfortunately, the vast majority of people are unable to provide such extensive trusts.
Without an SNT, a special needs individual could lose them:
- Health insurance
- SSDI stipend
- Medicaid waivers for their housing
- Medicaid waivers for their healthcare
- Assisted living fees
- Group home fees
The situation could become especially untenable if the individual’s trust tips them over the income threshold for benefits, but isn’t enough for them to afford everything they need.
Different Kinds of Special Needs Trusts
An SNT differs from a traditional trust in that, with an SNT, the beneficiary is unable to directly use trust assets for their own support, and they are also unable to revoke the trust. The role of the trustee is to use and invest their assets in the best interests of the beneficiary.
There are two primary types of special needs trusts, a first-party SNT and a third-party SNT. Sometimes called a “self-settled trust,” a first-party SNT is funded with assets that belong to the special needs individual who is also the beneficiary of the SNT.
On the other hand, a third-party SNT — also known as a supplemental needs trust — is funded with assets belonging to a person who is not the special needs beneficiary.
Common Terms Found in First-Party and Third-Party SNTs
Here are a few terms to familiarize yourself with as you begin working with OC Wills & Trust Attorneys to plan your estate and set up your special needs trust:
- Grantor: The person who funds the trust — in a first-party SNT, the grantor is also always the beneficiary.
- Successor trustee: The person who takes over if/when the original trustee is unable to continue as trustee
- Remainder beneficiary: The individual who receives any remaining trust assets after the beneficiary’s death — in the case of first-party SNTs, the state’s Medicaid division is typically the remainder beneficiary
- Compensation: The payment that a trustee receives for their services
Legal jargon is unavoidable in estate planning, which is why hiring a reputable attorney to safeguard the interests of your special needs loved one is vital.
Special Needs Trusts in Orange County, CA
In a family-oriented community like Orange County, it’s especially important to make sure that you are protecting your assets. One of the most important elements to consider as you work with your estate planning attorney is whom you will choose to serve as trustee.
Your trustee will likely determine the most important parts of your beneficiary’s life, including where your beneficiary lives, how they receive care, and who cares for them.
Your SNT trustee handles the trust assets to aid in the maintenance and support of the beneficiary. They may also need to deal with various other interested parties, such as other estate beneficiaries and estate creditors.
You must ensure that your SNT trustee is capable of managing the trust to protect your beneficiary and ensure their continued livelihood.
Contact OC Wills & Trust Attorneys Today
While it’s always difficult to imagine your children’s lives after you have passed away, it can be even more worrisome when you have a special needs dependent.
Our dedicated, accomplished team at OC Wills & Trust Attorneys has the tools and experience required to help you ensure the health, safety, and happiness of your special needs dependents. Contact us to schedule your consultation today.
