Blog

The Dos and Don’ts of Administering a Special Needs Trust

A special needs trust, also known as supplemental needs trust, is generally a standalone document that can also be a part of testaments and last will. Bestowed with official legal status in the year 1993 by the United States Congress, a special needs trust is specially made for a person with special needs, and it incorporates written instructions and guidelines on when and how to use the available funds.

Although a special needs trust can easily manage property and assets for the special person’s benefit, there are certain things that one must always keep in mind while administering a special needs trust. Well, you can consult the trust administration in Sonoma County to learn more about administering the special needs trust. However, before getting started with the special needs trust administration, it is imperative for you to understand how a typical special needs trust works.

How Can a Special Needs Trust Help?

A special needs trust is actually a relationship between 3 parties – a donor, a trustee, and a beneficiary. The standalone document of special needs trust not only spells out the wishes of the donor but also instructs the trustee on how the assets of the trust should be used. In this way, a special needs trust is a cost-effective way of managing the donor’s assets for the beneficiary.

However, receiving funds from the special needs trust can also cause a loss of donor’s eligibility in government assistance. It is important for you to know that creating a special needs trust or a supplemental needs trust will make you ineligible for Medicaid or SSI. So, in order to control funds, it is imperative for you to administer a special needs trust.

Further listed are some dos and don’ts of fiscal planning for special needs families that you must consider in order to administer a special needs trust.

Dos:

  • Do make sure that a special needs trust is ascertained. This step is necessary to ensure that a child or a person with special needs is not debarred from receiving common public benefits.
  • Do communicate with your friends and family regarding the existence of a special needs trust.
  • Do plan a special needs trust for a child with special needs based on his/her early education, later training, retirement, and other adult needs.
  • Do setup a 529 plan for a special needs child, and stay informed of all common public benefits that are available to a child or person with special needs.

Don’ts:                    

  • Don’t wait to plan a special needs trust for a child with special needs.
  • Don’t try to fund a special needs trust with term life insurance if you’ve better options like variable life insurance or whole life insurance.
  • Don’t name a special needs child as a beneficiary. Instead, you can name the simple trust as the recipient for insurance and retirement accounts.

These are some useful points that you need to consider while setting up and administering a special needs trust. In case you’re facing any difficulty in setting up your special needs trust, you can speak with the professional and certified estate planning lawyer of Johnston Thomas Law at 707-545-6542 to collect more information on administering a special needs trust.

Leave a Reply