Is a Special Needs Trust needed?
Occasionally I get questions from people about different trusts for their estate. I recently received an email asking about Special Needs Trusts, that I thought would be good to share.
Dear Annette,
My aunt and uncle have one son who is mentally handicapped, he lives in a group home where he is supervised and works. This is my aunt and uncle’s only heir. They are in their early 70’s my cousin is about 49 now.
What do they need to do if something happens to either one of them or both of them?
Do they need to set up a special needs trust?
Your Aunt and Uncle need to set up a special needs trust for the benefit of your cousin. If they do not, he will likely inherit cash making him ineligible for the governmental benefits he needs. A person who receives Medi-Cal and is in a program that follows the SSI rules can only have $2,000 of countable assets. All assets are countable unless specifically excluded, examples of Excluded assets are a home (he or she lives in), household goods and personal effects, an automobile, life insurance with a cash value of less than $1500, a burial plot and a revocable burial fund of $1,500, or les
A special needs trust allows a trustee to purchase extras that do not supplant the beneficiaries governmental benefits. For instance you cannot use the special needs trust funds to purchase groceries, meals or give them cash, but you can use the funds to pay for extras like clothes, phones, recreational equipment, television and cable, haircuts, glasses, airline tickets, travel, durable medical equipment, medical insurance, medical treatment for which public funds are unavailable, dental care, education and tuition. This is not a complete list, but I think it will give you the gist of why the special needs trust is so important for your cousin’s future.
Please have your Aunt and Uncle contact me and I would be happy to assist them in setting up this trust.
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