4 Important Things To Know About A Special Needs Trust

Here are four benefits to setting up a Special Needs Trust and why you might need it..

1. They Work With Governmental Programs

When you set up a special needs trust correctly, you create a revenue stream that does not impact access to government programs such as SSI or Medi-Cal. The money or assets in the trust become separate and act as their own “person” rather than attaching income to your special needs person.

1A. Set up the Special Needs Trust to Handle Life Insurance

A special needs trust can potentially allow someone to be the beneficiary for life insurance and other similar insurance policies. Because the money from the insurance policy belongs to the trust – in name of the special needs person, it is not income, but can be available as the person needs money.

2. A Catch-all for Assets

When you prepare for taking care of a special needs person after you are gone, a special needs trust can be an ideal arrangement. You can add many types of assets to the trust to create a balanced environment that handles many types of needs. For example, a special needs trust can hold:

  • Property and houses
  • Cash
  • Investments, including stocks and bonds or a portfolio
  • Personal property
  • Insurance policies and be named as the beneficiary with payouts held in trust for your special needs person.

With such a variety of asset types, a special needs trust can contain all the aspects needed to ensure that a special needs person is cared for, provided for, and has quality and safe housing in Santa Rosa, CA.

3. You Control Management

When you set up a special needs trust, you name the trustee. 

Those options include:

  • Family Members
  • Bank
  • Fiduciary

Because there is a range of options for who becomes a trustee of the trust, you can set up management to better suit the needs of the beneficiary. You do not have to rely on family members to manage the assets. This is especially helpful with a trust that holds many assets. A fiduciary can be better equipped to deal with taxation, investment and reinvestment, and disbursement.

4. Pooled Trusts

Some institutions handle pooled trusts which have the advantage of handling many Special Needs Trusts but are regulated so that each special needs person has their account and accounting. The money or assets are pooled to provide a better return on investments. These trusts must also be managed by a non-profit. Pooled trusts can be beneficial when reinvestment of trust assets is essential to providing a long-term flow of cash or income.

Is a special needs trust right for you? 

It can be challenging to determine whether a special needs trust is the right option for your loved one.  The process can seem overwhelming, which is why consulting with an attorney is a good first step. Attorney Charles Stark, who serves Sonoma County, California, and the surrounding communities has years of experience handling estate planning and the various trust options. Contact his team today to schedule a consultation.

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