Special Needs and Your Estate Plan in California

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20th Sep 2012

The main aim of planning your estate is to ensure that your loved ones get the most of what you leave behind and thus live a good quality of life after you are gone.  With a well-written will or living trust, your wishes for a good life for your loved ones – especially if they are healthy — may be realized.
                It’s a different case, however, when your beneficiary is a person with disability or is gravely sick. The money that they get from the Supplemental Security Income (SSI) or Medicaid only provides them with barely enough for their basic needs.  When you bequest a certain amount of money or assets to these people, you run the risk of having them be disqualified from SSI and Medicaid benefits.  In these special situations, every cent really counts. 
                To solve this dilemma, you can create a Special Needs or Supplemental Need Trust, especially for recipients of SSI and Medicaid.  Just like a will or a living trust, the earlier you prepare your Special Needs Trust, the better for your disabled or chronically-ill loved one.  At the very least, you must have one in place before your beneficiary turns 65.  The advantage of having a Special Needs Trust in place is that it allows your beneficiary to enjoy additional external benefits such as gifts, bequests, settlement from lawsuits or other financial windfalls – without affecting his eligibility with government-funded assistance.  These cash benefits can simply be channeled into the Special Needs Trust Fund.   
Another benefit of the Special Needs Trust Fund is that the money and assets placed in this Trust are protected from creditors or lawsuits.  Thus, if your disabled beneficiary should face a lawsuit or have to pay off creditors, the amount in the Trust cannot be used to settle a lawsuit or a debt.   Since the funds in the Special Needs Trust are not deemed as readyassets whendetermining eligibility for government benefit, this means you can use more of your cashassets to pay for supplemental expenditures such as medicine, caregiver, rehab and other special needs. They can thus enjoy a better quality of life even when you are no longer around.
You may now be thinking you have the answer to providing for a good quality of life for your disabled or chronically-ill loved one.  Before you draft your Special Needs Trust Fund, please invest your time in sourcing out a competent lawyer with experience and expertise in estate planning and especially Special Needs planning.  Please be warned that a badly-written Special Needs Trust can easily be subject to scrutiny by state and federal agencies in charge of providing funds.  After all, these people would like to make sure that the government will not be a victim of fraud.  As for you, you just want to make sure that your disabled loved one will still enjoy the good life even when you are gone.
A competent estate planning attorney can help you get your desires fulfilled. 

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