People with special needs are likely to need assistance throughout their lifetimes, and children may need support even after their parents are gone. In these circumstances, thoughtful estate planning can be crucial.

Working with a compassionate estate planning attorney could help ensure your loved one has what they need as time passes. If you need assistance with special needs estate planning in Covina, contact a lawyer with the right experience today.

Special Needs Estate Planning

In general, California tends to be a state that is protective of the rights of individuals with special needs. When estate planning comes up, many California families may automatically think of wills and how their possessions will be distributed after they are gone.

However, leaving gifts outright to a person with special needs may not always be the best decision. For example, making an individual with special needs the beneficiary on a parent’s financial or retirement accounts may affect their eligibility for disability or Social Security benefits.

For many families, a special needs trust might be a better option. Special needs trusts are functional legal constructs designed to provide for the financial needs of individuals with disabilities without impairing their eligibility for relevant government benefits. California law tends to be especially friendly toward the rights and welfare of those with special needs. With guidance from an estate planning attorney in Covina, establishing and funding a special needs trust could make a massive difference for these families.

Special Needs Trusts Under State Law

A special needs trust, also known as a supplemental needs trust, creates legal responsibilities and fiduciary relationships to hold assets on behalf of another person.

With this type of trust, families can ensure that their members with special needs can enjoy a better financial quality of life without losing Medicaid or SSI benefits.

The California Probate Code provides guidance regarding special needs trusts, specifically in sections 3600-3613. The trusts must be set up according to these guidelines to ensure they do not conflict with other state or federal laws that affect benefits administration.

Types of Special Needs Trusts

There are three primary types of special needs trusts: first-party, third-party, and pooled special needs trusts. The trusts vary primarily based on their funding sources.

First-Party Trust

In a first-party special needs trust, the funding source is the beneficiary’s own assets, which may or may not come from an inheritance. First-party special needs trusts must contain a provision stipulating that the beneficiary’s estate will repay California for any Medi-Cal benefits they received after they pass away.  This type of trust can only be established for a disabled individual under the age of 65.

Third-Party Trust

With a third-party special needs trust, relatives, friends, or other parties may fund it with their assets. Parents often choose to establish this type of trust for their special-needs children during the estate planning process because these types of trusts do not require the beneficiary’s estate to pay back the state.

Pooled Trust

The final type of special needs trust is a pooled trust. Many individuals or organizations fund a pooled special needs trust, which pools funds and invests them on behalf of multiple beneficiaries. People with special needs who have limited means may be eligible for these types of trusts.

A Pooled Trust can be established for a disabled individual of any age, and must be established and managed by a non-profit association.  A separate account is maintained for each beneficiary, but funds are “pooled” together for investment purposes.

One estate planning option for special needs families in Covina is the California Special Needs Trust, which the state manages. It can provide a cost-effective option for families who lack the resources to establish a trust on their own.

Reach Out to a Special Needs Estate Planning Attorney in Covina

Every type of special needs trust has pros and cons. Each family must consider its own priorities and wishes to determine what type of trust or other estate planning device would work best for it.

With the right guidance, special needs estate planning can secure the future of individuals with disabilities and provide peace of mind for Covina families. With the help of an experienced lawyer, choosing the right type of trust for your situation and discussing other estate planning issues will go more smoothly. Call today to learn more.

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Amity Law Group, LLP

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