A Special Needs Trust can be set up to help a person who has a disability and needs the financial support. Why are these trusts important, and what advantages do they have over other options—such as just giving the person the money as a gift?
The first way that a trust helps is that the money in the trust is not looked at as an asset by the government. This means that the person is still going to be eligible for benefits, and he or she can have the money in the trust as well. Money in a bank account could reduce the amount of benefits received.
Another reason a trust is so beneficial is that it can lead to superior care options for the individual in question. Though government benefits can help, the total amount given is often very low. It is designed to be enough for the person to get by, but that does not mean he or she will have excellent care options. Benefits and the trust together can make this possible.
As with all trusts, another benefit is that you can set the trust up when doing your estate planning. It will then be administered in accordance with your wishes. You know that your money is going to be used to help the individual with special needs in the ways required. This means you can worry about it far less than you would with a financial gift or a lump sum.
If you want to set up a special needs trust for this purpose in California, it’s very important to do everything by the book so that it is legal and so that the money is used as intended.
Source: National Alliance on Mental Illness, “Special Needs Estate Planning,” accessed July 23, 2015