A special needs trust is a trust for an individual who cannot or should not handle his or her own finances. Those individuals typically are incapacitated, mentally or emotionally. Many times the person is simply a spendthrift, cannot be trusted with money. Some times the person is a drug addict or mentally ill. Other times the loved one has been developmentally disabled since birth.
The key is holding the inheritance in trust for life and giving the trustee absolute discretion whether or not to distribute any amount to the beneficiary. The beneficiary then has no right to any distribution. Hence, the trust is not counted as a resource for public assistance purposes, in particular Medi-Cal and SSI. Therefore, naming the trustee is extremely important, someone who will distribute to the beneficiary what he or she needs, not what he or she wants. That is why it is called a special needs trust.
Typically the special needs trust is simply a provision added to your living trust. Be suspicious of any attorney who tries to sell you on a separate, irrevocable trust set up now. Most likely you would be paying a large amount for something you do not need now.
How Can I Find Out More?
For a free consultation to learn more about adding a special needs trust provision to your existing living trust or setting up a living trust with such a provision, please do not hesitate to contact us at (805) 482-2282, or e-mail us at KGS@Staker.com.