The future of children and grandchildren are often at the forefront of our minds when planning our estates. However, if you have a special needs child or grandchild that you wish to care for after your death, setting up your estate to do so properly requires careful consideration and thought with the help of an expert.
Trust planning is essential for special needs loved ones
A “supplemental needs” or “special needs” trust is the most common type of trust created by the parent or grandparent (or “Grantor”) for the child with special needs (the “lifetime beneficiary”). The trust will direct that any amounts remaining in the trust that weren’t used for the lifetime beneficiary and will be distributed ultimately to the Grantor’s other descendants.
These types of trusts are more complex than typical trusts because a successor trustee must be named who can manage the funds and make distributions after the Grantor becomes disabled or dies. While it may be a family member, typically the complexities of these trusts call for an outside trustee (i.e. not a family member) in order to avoid conflict.
Potential setbacks in caring for a special needs loved one after death
Even if an outside party is named as a successor trustee, the family could still have input in the distributions of the trust by having the trust name a “trust protector” review the investments and distributions and who could hire and fire trustees. A family member also could be named as a “trust advisor” or even have a trust advisory committee to provide input about the lifetime beneficiary’s needs. If there is any discrepancy in the these parties insights as to how to care for the special needs family member, major problems could arise.
Advocating for a loved one before you die
Trusts that take into consideration special needs family members must be carefully worded to ensure that the funds can be used for the full benefit of the child with special needs. In particular, careful consideration should be given whether the trust can only supplement (and not supplant) government benefits, or if doing so would reduce or eliminate government benefits. The responsibilities of the overseeing trustee should be discussed beforehand. The unwanted situation is for a trustee to have their hands “tied” because of the wording or stipulations of the trust.
Seek Advice From a Skilled and Knowledgeable Sonoma County Estate Planning Attorney
If you have any questions or concerns regarding when or how frequently you should update your estate planning documents, please feel free to contact The Law Offices of Bridget Mackay today by visiting our contact page to arrange a consultation. We serve communities in Sonoma and Marin counties.