Special Needs Trusts in Palm Desert
How to Make a Special Needs Trust for Your Child with Special Needs
A Special Needs Trust (SNT) is a legal trust created to benefit a person with special needs. The purpose of an SNT is to hold and manage assets for the benefit of the person with special needs without jeopardizing their eligibility for government benefits.
It always astonishes us to hear parents with a child with special needs explain that they were not aware of what they needed to do to safeguard their kid's future well-being and care adequately. They also say they didn't realize they had anything to accomplish. If you're a parent of a kid with special needs, this post is for you. Please share this article with your friends or family if they have a kid with special needs.
Every parent whose kid has special needs must be prepared to meet their child's emotional, physical, and financial requirements if something happens to them.
The first and most critical step in ensuring your child's future is to name a guardian. A guardian is a person who will be responsible for your child if something happens to you. It would be best to choose someone you trust implicitly and who shares your parenting philosophy.
You should also consider naming an alternate guardian if your first choice is unable or unwilling to serve. If you have more than one child with special needs, you may consider naming different guardians for each child.
You'll also need to supply financial resources so that your kid may live their life the way you'd want. It is when things might get tricky for children with special needs. It may appear to be a "Catch-22" situation. You want to give your child enough funds to enjoy a decent existence without relying on others for assistance. If you pay a person with special needs directly, you risk losing them from government assistance.
Making a Special Needs Trust
If you have significant assets, you should consider creating a Special Needs Trust (SNT) to hold those assets for your child's benefit. An SNT is a legal trust created to benefit a person with special needs. The purpose of an SNT is to hold and manage assets for the benefit of the person with special needs without jeopardizing their eligibility for government benefits.
On the other hand, a special needs trust is a legal arrangement that allows parents to provide for their children's future expenses without exposing them to potential tax penalties or making them dependent on others. However, special needs trusts are complicated and vary significantly from state to state, so you should work with us as your Personal Family Lawyer® to establish a trust that will meet your family's specific needs.
There are two types of Special Needs Trusts:
A First-Party Special Needs Trust - This type of trust is funded with the disabled person's own money, such as money from a personal injury settlement.
A Third-Party Special Needs Trust - This trust is funded with money or property from someone other than the disabled person, such as a relative or friend.
Setting Up The Trust: What You'll Need.
A special needs trust cannot be used to make direct payments to a beneficiary. The money must go through a third party, called the trustee, who manages the trust.
You'll need the following to set up a Special Needs Trust:
- A Special Needs Trust Document - This document explains the trust's terms and how it will be run.
- A Funding Agreement - This document transfers ownership of the assets to be placed in the trust.
- A Letter of Wishes - This document is optional, but it can be used to express your wishes for the trustee regarding the care and management of the trust.
Who Can Be a Special Needs Trustee?
The trustee can be anyone over the age of 18 who is willing and able to manage the trust. The trustee can be a family member, friend, or a professional trustee company.
If you choose a family member or friend, you should consider what would happen if that person can no longer serve as a trustee. You may want to name an alternate trustee in your Special Needs Trust document. It would help to consider whether the trustee lives in the same state as the beneficiary. If not, there may be legal complications involved in managing the trust.
A professional trustee company may be an excellent option to ensure the trust is managed correctly. A professional trustee company will have experience working with Special Needs Trusts and can handle the trust's day-to-day administration.
Putting Money and Property into a Special Needs Trust
Once the Special Needs Trust is created, you'll need to fund it. It's possible to apply for trust by transferring property or assets into it. For example, you may transfer your home to the Special Needs Trust.
You can also place money into the Special Needs Trust through a life insurance policy. You may name the Special Needs Trust as the policy's beneficiary, and the death benefit will be paid into it.
You may also make periodic contributions to the Special Needs Trust by using the bank account or investment account of the Special Needs Trust.
We'll devote a future post to the many estate planning options you may use to give a special needs trust money. Until then, if you want assistance selecting the planning vehicles that are best for this purpose, call us your Personal Family Lawyer®.
The Duties Of The Trustee.
The trustee has several duties, including:
1. Managing and investing the trust's assets:
The trustee must use the trust's assets to provide for the beneficiary's needs. It includes managing and investing the trust's money to pay for the beneficiary's future expenses.
2. Paying the beneficiary's bills:
The trustee must use the trust's assets to pay for the beneficiary's current and future expenses.
3. Keeping records of all trust transactions:
The trustee must keep records of all money that goes into and out of the trust. These records must be kept up to date and made available to the beneficiary or their representative upon request.
4. Filing tax returns:
The trustee must file annual tax returns for the Special Needs Trust.
5. Distributing trust assets:
When the beneficiary dies, the trustee must distribute the trust's assets according to the terms of the trust.
6. Providing reports to the court, if required:
If the Special Needs Trust is created by court order, the trustee may be required to provide periodic reports to the court.
7. Following the terms of the trust:
The trustee must comply with the terms of the trust. These conditions are determined by the person who establishes the trust and may include limitations on how and when trust assets may be utilized.
The Special Needs Trust can be a powerful tool to provide for a beneficiary with special needs. When used correctly, it can ensure that the beneficiary has the resources they need to live a comfortable life.
If you have any questions about Special Needs Trusts or other estate planning matters, don't hesitate to contact us as your Personal Family Lawyer®. We would be happy to help you and your family.
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