Plan. Protect. Preserve. | Feldman Law Group

There are many great reasons for updating and keeping your estate plan current. Here is just one example of what can happen to your family if you don’t. This year, for whatever reason, I am drafting a lot of First Party Special Needs Trusts. For those of you who may be unfamiliar, a Special Needs Trust is a type of irrevocable trust that allows individuals to still receive public benefits. The reason I am brought in is because Mom & Dad’s trust did not have provisions for a child with a disability or who is receiving public benefits.

A First Party Special Needs Trust is needed when someone with a disability who is receiving public benefits (such as SSI or Medi-Cal) inherits money directly. When this occurs, a First Party SNT needs to be put in place to hold the inheritance.

While a First Party SNT will preserve public benefits, it comes at a cost. Mom or Dad already paid for an estate plan (in most cases) but just never thought to put an SNT into their plan. Now, the beneficiary is forced to pay me to set up their Trust. If the SNT provisions had been included in the parent's trust, it would be considered a 3^rd Party SNT, and the real benefit to that is that Medi-Cal is not entitled to be reimbursed. This means that money left over when the beneficiary dies can be passed on to the beneficiary’s siblings or his or her children.

These are awkward conversations for most families. But it is important. If there is a better solution available, it’s a win for everyone. Just one more reason to have your estate plan reviewed by a professional.

Stay safe and well!

Aaron