Special Needs Planning
Many severely disabled persons rely on some form of public assistance, such as Medi-Cal or Supplemental Security Income (SSI). Since most public assistance or support is based on financial need, leaving a legacy to a disabled person could result in making that person ineligible for public assistance. For example, parents who would like to provide for the future care of a disabled child in the event that the parents predecease the child are faced with the prospect of having to put excessive assets or income into the possession or control of the disabled child. Such action would very likely make the person ineligible to receive public assistance or require that he or she spend-down the inherited assets until he or she again satisfies resource and income limits to be eligible to receive public benefits. Equally unpalatable is the prospect of disinheriting the disabled person.
A Special Needs Trust is a trust specially designed to permit parents or family members to leave assets to take care of the “special needs” (i.e. those that are not being met by the public benefits) of a severely disabled child or adult in such a way that the disabled person will not be disqualified from receiving public benefits. The Special Needs Trust accomplishes this by limiting the amount of control the beneficiary has over the principal and income of the trust and by limiting the types of expenditures the trustee will be permitted to make on behalf of the beneficiary.
The design of a Special Needs Trust which will accomplish the purposes and intentions of the settlor is very complex and requires the expertise of the estate planner who is familiar with the ever-changing rules and regulations of public assistance programs, who has had experience in drafting such trusts, and who has kept abreast of court decisions in this area of the law.
The selection of a trustee is important in any trust, but more so here. The parent of the disabled child will have created, in most cases, a specific plan which gives the disabled person the greatest degree of comfort. The trustee should be made aware of that person’s problems, the existing plan and actions being taken to care for the disabled person. The trustee will then be able to do his or her best to preserve the continuity of the disabled person’s life. If a corporate trustee is utilized, the corporate trustee may require the appointment of a special advisor for assistance in the administration of the trust and to insure that all available public benefits are being used.
~ Contributed by Wm. Peter Terhune, Esq.