Special Needs Trusts for Children and Elderly Require Careful Estate Planning and Long-Term Financial Considerations

As a part of our recent focus on trusts and estates, the topic of our most recent radio program on Saturday afternoon was Special Needs Trusts, which are becoming a much more frequent part of family estate plans.

We covered several aspect of the complex topic of Special Needs Trust, but only scratched the surface of a process that involves legal issues at the federal, state, and local levels, as well financial considerations and transactions that may change over time depending on possible future revisions to related laws and tax codes.

Some of the points we discussed on the show were:

  • The different types of Special Needs Trusts, which serve various circumstances, are referred to by several different names, which can cause confusion, such as: first-party, self-settled, third-party, sole-benefit, family-type, living, inter vivos, type A, court-order, and pooled.
  • How receiving lump sums of government benefits could disqualify a beneficiary, as well as the terms that fit within government criteria.
  • The different types of disabilities that are covered by a Special Needs Trust, such as general old age, victims of accidents, children with conditions such as autism or Downs Syndrome.
  • The extended power of discretion available to a Special Needs Trustee, compared to the trustee of a standard trust fund, as a means providing the flexibility needed to deal with changes to laws and regulations.
  • The types of individuals who might be best suited to serve as a Special Needs Trustee, as well as the complexity and time-requirements of the position and the conflicts of interest that can arise in managing a Special Needs Trust.
  • Allowable expenses for taking care of the Special Needs Trust beneficiary.
  • Tax filing requirements for Special Needs Trusts.
  • The circumstances under which a court might establish a Special Needs Trust.
  • Court petitions to protect trustees from future lawsuits by adding a layer of transparency to decision-making processes.
  • The general basis for someone being the beneficiary of a a Special Needs Trust: not being able to manage day-to-day personal finances, due to conditions such as mental or physical disabilities, or temporary incapacitation from drug/alcohol dependency.
  • Estate plan “Living Trust” clauses that allow for Special Needs Trusts to be set up in the future, for cases such as known family hereditary diseases that may arise.
  • Trust protectors who have the power to remove a trustee without court intervention.
  • The serious implications, and the long-term negative impact on a beneficiary, of incorrectly setting up a Special Needs Trust.

Though it is possible to legally establish a Special Needs Trust by yourself, the complexity of the laws and regulations involved, along with the implications of making a mistake in the process, really do warrant consulting with experts in this area rather than handling it alone.

Here are a few resources about Special Needs Trusts:

The Law Offices of Connie Yi, P.C. is uniquely qualified to help you determine if your family should establish a Special Needs Trust and then, if it is appropriate for your situation, help you properly establish it and create the proper financial strategy to support it as long as is needed. Connie Yi is a San Francisco Bay area estate planning and tax law attorney, as well as a highly-experienced Certified Public Accountant.

To schedule a free consultation about a Special Needs Trust as a part of your estate plan, please contact us. For your convenience, we have four conveniently located offices in the Bay area: San Francisco, San Mateo, San Jose, and Pleasanton.

The time to file annual taxes is almost here (and don’t forget that 4th-quarter taxes need to be paid January 15th), so next week on our radio show, we will discuss the “Do’s and Don’t’s of a Tax Audit,” so please tune into this timely upcoming show on Saturday, November 12, at noon, on AM 1220 KDOW.

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2 Responses to Special Needs Trusts for Children and Elderly Require Careful Estate Planning and Long-Term Financial Considerations

  1. Paul Heckt says:

    “How receiving lump sums of government benefits could disqualify a beneficiary, as well as the terms that fit within government criteria.”

    This is something many people don’t understand, and it’s something I seek to educate all my clients about. It’s important they know the level of help their loved one receives can disqualify them later in life.

    Paul Heckt
    Special Needs Trust Lawyer in Minnesota

    • Staff says:


      Thanks for reading our blog and for your comment on this important point. As I stated on my radio show about Special Needs Trusts, this is an area of laws and regulations that is so complex and of such great importance to the beneficiaries, that I urge anyone with this type of need, whether in Minnesota, California or any other state, to seek expert professional counsel and assistance to help them properly choose, establish, and manage the appropriate type of trust and its funding, to meet their family’s long-term needs.

      Connie Yi

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