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Special Needs Estate Planning Attorney in Downey Helping You Support Your Loved Ones

If you have a loved one with disabilities, establishing a trust is an excellent way to provide funds for them using your own assets. Setting up trusts is an integral part of estate planning and can even limit your tax liability for the future. Although setting up a trust is complex, an estate planning attorney can walk you through it to ensure accuracy and expedite the process.

Choosing what kind of trust to establish and which assets to allocate is essential. Your financial situation is unique, so your estate plan should be, too. If you have questions about setting up a special needs trust or want more information, contact Resolve Law Firm, APC today at 213-583-5547.

How Do Special Needs Trusts Work?

A special needs trust is a type of trust that is set up for people with disabilities or functional needs. Special needs trusts are ideal because they provide support without disqualifying individuals for Medicaid, Supplemental Security Income, and other government benefits. By creating a special needs trust, you can allocate assets and funds toward your loved one’s personal income without taking away any government benefits they qualify for. Like other trust accounts, special needs trusts involve a grantor who establishes the fund, a trustee who manages the account, and a beneficiary who receives the benefits from the fund.

The beneficiary of the trust can spend their funds on anything they’d like to. Most commonly, special needs trusts are used to pay for housing costs, medical expenses, home care, and transportation. Because government benefits often do not cover all of these expenses, the funds from a special needs trust can be essential in closing the gap.

What Are the Types of Special Needs Trusts?

An estate planning lawyer can help you decide between two main types of special needs trusts. Third-party special needs trusts are the most common, although first-party special needs trusts do make more sense for some people.

Below are the different kinds of trusts you may choose from:

Third-Party Special Needs Trust

A third-party SNT is very similar to a traditional trust. It is funded by someone other than the beneficiary and can be revocable or irrevocable. A third-party SNT can be stand-alone or testamentary.

A stand-alone SNT gives the beneficiary access to the funds while the grantor is still alive. A testamentary trust allows access after the grantor’s death.

First-Party Special Needs Trust

A first-party special needs trust is funded by the beneficiary. If an individual is able to do so, they can set up their own SNT to protect their assets and avoid losing access to government benefits. A first-party SNT can also be set up by a loved one and funded by a beneficiary’s assets.

First-party SNTs require additional setup and must be registered with a Medicaid repayment provision. This provision stipulates that after the beneficiary passes away, the remaining assets will be used to repay Medicaid before being distributed.

Pooled Special Needs Trust

Pooled special needs trusts are typically administered by nonprofit organizations. These trusts usually get funds from multiple families, donors, and community members. The funds are then allocated to individual beneficiaries within the pooled trust. The nonprofit organization chooses a trustee to act on behalf of each beneficiary.

How Do You Set Up a Special Needs Trust?

Before establishing a special needs trust, it’s essential to take your loved one’s income, bills, and expenses into account. You should also consider their wants, needs, and long-term goals. This will help you decide on the type of trust to establish and the frequency of payments.

First, designate a beneficiary to receive funds to set up a special needs trust. Then, choose a trustee to manage the assets in the trust. You can assign yourself as the trustee or name a third party. After that, it’s time to write up your documents and sign them. It’s recommended that you work with an estate attorney to ensure that your paperwork is accurate to avoid delaying the process. Then, you can notarize your documents with the help of a notary and two witnesses. Once your trust is established, you can fund it with assets like real estate, investments, money, or personal items.

What Are the Benefits of a Special Needs Trust?

A special needs trust is beneficial for the beneficiary as well as the grantor. For the beneficiary, they get to fund their life without worrying about losing government benefits that may pay for their healthcare or housing costs. For the grantor, they can reduce their tax liability for their entire estate while helping their loved one with their expenses. If the SNT is irrevocable, the assets within it cannot be seized by creditors or anyone who wins a lawsuit against the estate.

Special needs trusts must be established before the beneficiary turns 65. The trust will end when the beneficiary dies, and the remaining trust assets will be distributed among the remainder beneficiaries. The remainder beneficiaries can be decided by the grantor of the trust or allocated by the state in the case of a first-party trust.

How Can a Special Needs Trust Lawyer Help Me?

Helping a loved one with their healthcare costs, housing costs, and other needs is an excellent way to assist someone with disabilities. Because special needs trusts allow individuals to keep their access to government benefits, they are ideal for many scenarios. However, setting up a special needs trust on your own can be difficult if you don’t have legal experience.

Consulting with an estate planning lawyer is essential to expedite the process of creating a special needs trust. With an attorney on your side, you can ensure that all your paperwork is accurate and that a special needs trust is right for your estate. If you’d like to set up a special needs trust or have any questions, contact Resolve Law Firm, APC, at 213-583-5547.