If you are the parent of a special needs child, you probably have concerns about how you can best care for and protect your child’s needs going forward. In most instances, putting protections in place to plan for your child’s future can help make your and your family’s financial position much more safe and secure.
The primary purpose of a special needs trust, or SNT, is to preserve various benefits for a special-needs adult or child. The trust safeguards these assets without stopping Medicaid, SSI, or other government benefits that the special needs adult or child may receive – either at present or some point in the future. There are several types of special needs trusts that parents can consider for their children. It is also important to keep in mind that these different trusts have various advantages and disadvantages.
Therefore, if you are planning a special needs trust for your child, it is important that you have a knowledgeable California estate and trust lawyer representing you and advocating for you. Your lawyer can help you select the type of trust which best serves you and your family’s best interests, and which helps to preserve assets for the future. Your attorney can also help you set up the appropriate special needs trust.
One type of special needs trust that is available in the State of California is a first-party trust. A trust of this kind consists of assets to which the trust beneficiary is legally entitled. In some instances, the assets which are present in the first-party trust might include personal injury settlement proceeds, such as from an accident that led to a monetary settlement.
Other times, the first-party trust may include the trust beneficiary’s own personal assets. For a first-party trust to comply with state law, it must contain all of the necessary provisions requiring notification and payback to the state in case the trust ends, or the beneficiary dies.
With a third-party SNT, the trust funds come from someone else’s assets other than the trust beneficiary. Likewise, the beneficiary of the trust does not have possession of these assets or a legal interest in them. One of the most important benefits of a third-party SNT is that it helps to ensure that the parent’s assets stay with the family.
Third-party SNTs are especially helpful for parents and, in some cases, other relatives who want to set aside certain funds that will benefit a special needs child over the remainder of the grantor’s lifetime. Moreover, the SNT protects the assets right away, and these assets remain protected if the special needs child has some type of financial or legal problem later in their life. Finally, a third-party SNT can protect the beneficiary’s assets in the trust, regardless of their age. A knowledgeable estate planning attorney can help you determine which of these trusts is best for your special needs child, your assets, and your unique circumstances.