If you have a loved one with special needs and want to fund a Special Needs Trust (SNT) for him or her after your death, there are plenty of options for you to do so. However, funding a Special Needs Trust should be done under the strict guidance of an attorney experienced with special needs matters. That’s because incorrectly funding a Special Needs Trust can have serious consequences on your loved one’s financial well-being and can lead to future ineligibility for federal and state benefits. It’s also important to note that leaving any type of asset or property to a loved one with special needs without the use of a Special Needs Trust can also disqualify them from receiving current benefits as well.
A Last Will and Testament can create a Special Needs Trust (called a Testamentary Trust) or fund an already existing Special Needs Trust by designating which assets and property are to be left to the individual with special needs. However, it must be noted that using a Last Will and Testament can lead to potential hold-ups and expenses if the Will must go through the probate process, which may reduce the amount of money passing to your loved one. In addition, since probate is a public proceeding, all of your loved one’s financial affairs concerning the Last Will and Testament will not remain private.
A Revocable Living Trust accomplishes the same goal, but with two main differences: administration of the Trust does not have to occur within the probate court, meaning that the assets and property can be distributed quickly and with fewer expenses, and that the assets already in the Trust can avoid probate. Any property held outside of the Revocable Living Trust will be directed by the Last Will and Testament, adding an extra step to the process of your loved one’s Special Needs Trust being funded after your death.
One other way to fund a Special Needs Trust after you pass away is to make the Special Needs Trust the beneficiary of your financial and investment accounts, as well as any life insurance policies you may have. Designating a beneficiary on these accounts ensures that they avoid probate and naming the Special Needs Trust as the beneficiary instead of your loved one ensures that their eligibility is not impacted.
If you would like to learn more about funding a Special Needs Trust for a loved one after you pass away, or if you need help planning for a loved one with special needs, please set up an appointment at our Encino special needs law office by calling (818) 905-6088.
