If you are a parent of a child with special needs, you want to care for the child if something happens to you. The child will likely live longer than you will, so making sure that the money you leave is properly protected and managed very well is very important. There is only one safe way to make sure of this and that is the creation of a special needs trust managed by a family member and a professional trustee who will share the role of co-trustees. An experienced attorney can discuss a special needs trust and how you can establish one.
The following are the 6 issues to consider when developing a special needs trusts:
1. Choose the professional trustee carefully since they will have the power and the responsibility for investing the money and determining how the money will be spent. The trustee should completely understand the needs of the trust beneficiary who may be an adult at the time of your death.
2. The trustees should understand that they must be sure to not violate the eligibility rules of the public programs which benefit the trust beneficiary. The trustees should be able budget and plan for the long term care as well as keep good records.
3. The question of whether the trust should be revocable or irrevocable is an important one. Generally, a special needs trust should be revocable meaning that you can change it at will or cancel it. However, this question can be best answered during a discussion with an experienced attorney who understands your concerns and the needs of the child both short-term and long-term.
4. You will want to provide the trustees with as much guidance as you can because this is the best way to make sure that your child gets the best care and support that they need. Since you know your child’s needs and the special support they require, you are able to relate this information for the trustees to use in allocating the money. Since the trust needs to be as non-restrictive as possible to allow the trustees to react to changes in the child’s needs or changes in the public services available, your guidance can be put in a memorandum of intent.
5. A trust overseer or a trust protector can be incorporated into the trust to oversee the actions of the trustees. These parties may give you peace of mind about how the trustees will serve your child, but the cost and the cumbersome mechanisms may not warrant this option. Other ways of protecting the trust can be discussed by your attorney.
6. There is no easy answer to how much money should be put into the trust. Your attorney can help you determine the amount based on the relevant factors of your income, assets, life insurance and the child’s needs as well as the consideration of the other children you have.
Disclaimer: This article is intended to provide a general summary of the California usury laws and should not be construed as a legal opinion nor a complete legal analysis of the subject matter. June Lin is an attorney at Niesar & Vestal LLP in San Francisco, a law firm specializing in business law and corporate finance.