When you are planning for your estate, you must consider your beneficiaries’ individual needs. You can give some people a large sum of money and be confident that they will be fine. Others may need an allowance and someone else to keep an eye on them.
This is often the case for people with special needs. Depending on their condition, they may not be able to handle money or make wise financial decisions. After you’re gone, you won’t be able to look after them, and you must create a system that keeps them healthy, fed, and sustained.
If you have loved ones with special needs, your best option is to build a trust just for them. Let’s clarify what that means. A trust is a living financial entity. You can have one while you are alive, but it can also live on without you after your death. When you put property into a trust, that trust becomes the owner of that property, and it controls that property.
Here are your options for a special needs trust in California.
First-Party Special Needs Trusts in California
The money and property in a first-party SNT (special needs trust) belongs to the disabled person. They can have their benefits, income, and so on deposited directly into the trust. These assets can also include any inheritance you give them.
From there, the trust can control and manage the beneficiary’s money if necessary. It can put the recipient on allowance, pay their bills, and so on.
In California, there are two different types of first-party SNTs. One can be established for any disabled person under 65.
The other is called a “pooled” trust. There are no age restrictions on these SNTs. A non-profit organization manages the pooled trust. The trust can then give benefits to multiple recipients, each of whom has their own account. Within these trusts, funds are pooled together, and the trust can use any extra money to make investments, further benefiting the recipients.
Third-Party Special Needs Trusts in California
These trusts can operate the same as a first-party one. The major difference is that someone other than the beneficiary can fund a third-party special needs trust. Anyone can contribute, and they can add any property they choose. The recipient does not need to establish ownership beforehand. These trusts are helpful when several living family members can regularly contribute to them.
Talk with an Attorney
The kind of SNT you choose with be highly dependent on your circumstances. You must consider your ability to provide alongside the needs of your beneficiary. For some people with special needs, the trust can simply be a helpful backup, as they are fully capable of managing their finances. For others, the trust must manage all their spending, sometimes going so far as spending for them.
Make sure you meet with a good lawyer to discuss your situation. They can help guide you in the right direction, and they can help create solid documents that can protect your loved ones later.
If you have questions about establishing a special needs trust, contact our team for help. You can call us at (916) 571-1550, or you can schedule time with us online.
