Families that include relatives or children with difficulties or special needs must consider care and support for them in the future. You have a few options for estate planning that take into account your family’s particular situation and which needs you aim to meet.
Is a Support Trust Right for You?
A support trust contains a section in the trust document that directs the trustee to pay the beneficiary money from the trust for support. The section usually says that the trustee should pay as much money from both the income and “principal” (original trust assets) as the beneficiary needs for education and personal support.
Support trusts are great for some family situations, such as:
- Financially irresponsible relatives;
- Relatives who cannot hold down a regular job but do not qualify for disability; or
- Relatives with significant debt.
Assets placed in a support trust are protected from creditors to the extent that the assets are needed for support of the beneficiary. Moreover, the beneficiary cannot access the assets unless the trustee deems it appropriate to make a distribution. For these reasons, a support trust could be well-suited for your relative.
Is a Special Needs Trust Right for You?
If your relative or child has special needs beyond financial issues or manageable health problems, then a special needs trust may be a better choice than a support trust. Special needs trusts (SNTs) allow people receiving government benefits to also receive support from relatives or their own assets.
Government benefits programs often have strict asset and income limits, but people with special needs may require funds beyond the benefits amounts to live comfortably. Funds from special needs trusts can pay for education, in-home nursing care, and other items not always paid for by benefits.
Unfortunately, receiving money from a support trust or gifts of cash from relatives can disqualify your child or relative from government benefits. Setting up a special needs trust can help you provide for their support while keeping the needed benefits.
Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.