If you have grandchildren with special needs and hope to leave them money when you die, you’ll want to take extra care with your estate plan. Your good intentions could inadvertently result in them being disqualified for vital sources of public support. Legal experts break down the challenges and offer a solution.
Appointing a Trustee for a Special Needs Trust
When children turn 18, they become adults in the eyes of the law—even if mental or physical capacity issues preclude them from living independent adult lives. To qualify for assistance that is likely to be critical over a lifetime, like Medicaid and Supplemental Security Insurance (SSI), their assets cannot exceed the limits set by the government—which are very low. That’s why simply leaving special needs grandchildren a gift in a will or trust could become problematic. Instead, Frank & Kraft advice setting up a special needs trust:
A special needs trust, also referred to as a “supplemental” needs trust, is a specialized irrevocable living trust that allows you to make gifts to your grandchild without jeopardizing his/her eligibility for assistance. For a trust to be recognized as a special needs trust by SSI, Medicaid, or other assistance programs, very specific language must be used and the trust must be drafted properly…Once created, you can transfer assets into the trust to be used to supplement the care provided to your grandchild by programs such as SSI and Medicaid. In addition, other family members, such as your children (the child’s parents) can contribute to the trust and the trust may continue to provide supplemental care for your grandchild long after you are gone.
When you work with a lawyer to create the trust, you’ll appoint a trustee to manage and distribute the assets. You can include specific details about how you wish for this to be done, and other expectations for the trustee in the trust agreement. Given the fiduciary responsibilities undertaken by trustees, the trust agreement may require the procurement of a trustee bond. A trustee bond is a type of fiduciary bond that helps to protect the interests of the trust and beneficiaries by guaranteeing the faithful performance of a trustee in accordance with the law. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain a trustee bond. Just get a quote online, fill out the information, and enter a payment method. The bond can be printed or e-filed from anywhere.
Understanding The Trustee’s Duties
Extra care must also be taken when appointing a trustee to oversee a special needs trust. It will likely be necessary for the trustee to be able to work collaboratively with other professionals and people involved with the beneficiary. For example, if there is a guardian or conservator also helping out, efforts to meet the needs of the beneficiary must be coordinated. The trustee must also keep the beneficiary and other designated family members or advisors, informed of trust activity. Accurate records and reports, including reports related to social security and medicaid benefits the beneficiary receives, are also duties of the trustee. Learn more about the trustee role related to special needs trusts right here.
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