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When a Trust Isn’t an Option: Planning for Your Loved One with Special Needs

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Special needs trusts are great tools for families that want to protect assets and give their loved one with special needs an enhanced quality of life. The truth is, however, that special needs trusts are not always the best solution. This is due to factors based on the family’s individual situation, the costs involved with a special needs trust, and the duties and responsibilities of the trustee. In cases where a special needs trust will not fit your family’s situation, there are alternatives that can still achieve your goals for special needs planning.

If your financial situation won’t allow you to leave a considerable sum to your loved one with special needs and creating a special needs trust does not make fiscal sense, you may want to consider leaving money to a close family member or friend who can use the money in the best interest of your loved one. Be warned, however: this method does not provide many protections for your loved one for the sole reason that the money will be owned by the person you leave it to – not your loved one.

Another approach is to leave the money directly to your loved one if the amount will not impact his or her ability to collect federal and state benefits. You must also be sure that your loved one can responsibly handle the amount of money you leave, which in many cases is not an option. Once again, this approach may only be advisable if you’re not leaving a significant amount of money to your loved one with special needs, and any plan such as this should be made with the involvement of an attorney experienced in special needs planning.

A pooled trust is another alternative available instead of setting up a special needs trust. These trusts are usually operated by a non-profit organization and combine gifts made to individuals with special needs to be managed by a trustee under the supervision of the organization. Benefit eligibility is typically not impacted by pooled trusts and your loved one can enjoy the legacy you leave behind.

If you would like to get more information about special needs planning, or if you’d like to have a review of your existing special needs plan for your current situation, please set up an appointment at our San Fernando Valley special needs planning office by calling (818) 905-6088.