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Walnut Creek Estate Planning Attorney / Walnut Creek Special Needs Estate Planning Attorney / Walnut Creek Third Party Special Needs Trust Attorney

Walnut Creek Third Party Special Needs Trust Attorney

Raising a child with special needs is more than a full-time job; every day is consumed with providing physical care, love and emotional support, and in spare moments worrying about what the future will bring. As a parent or grandparent of a child with special needs, you want to do all you can to help, including providing financial support. But children and adults with special needs often rely on government assistance for housing, education, living allowances and other vital services, and access to these means-tested government programs could be cut off if the individual is deemed to have too much income or assets to qualify. From our offices in Walnut Creek, special needs estate planning attorney Aaron Feldman and the Feldman Law Group help individuals throughout Contra Costa County set up third-party special needs trusts for their loved ones, ensuring their cherished family member gets the monetary assistance they need without jeopardizing their eligibility for government benefits.

How does a third party special needs trust work?

There are generally three parties to a trust: the person creating the trust, known as the settlor or grantor; the trustee; and one or more beneficiaries. Cash, stocks, property or other assets are placed in the trust for the benefit of the beneficiary, but it is the trust itself that holds legal title to the assets, and not the beneficiary. The trustee manages trust assets, including investing funds with an investment advisor and liquidating assets as needed to pay for the beneficiary’s housing, education, travel or other qualified uses of trust funds.

With a third-party special needs trust, the beneficiary can benefit from the income generated by the trust without the trust assets being counted as belonging to the beneficiary. The beneficiary can continue to receive needs-based government benefits (SSI, Medi-Cal, Section 8 Housing and more) without being disqualified for having too many assets or too much income, while also benefiting from the trust.

Who can create a third-party special needs trust?

Any person can create a third party special needs trust for the benefit of another. Most often, the trust is created and funded by a parent or grandparent during their lifetime. Persons engaging in estate planning may also leave funds to the trust in their will or trust, or through beneficiary designations on life insurance policies, retirement plans or other instruments.

Can creditors get to the funds in a third-party special needs trust?

Since the trust funds belong to the trust and not the beneficiary, the assets in the trust are safe from creditors of the person with special needs. While some adults with developmental disabilities may have their bills paid for them by a conservator under a limited conservatorship, others enjoy a higher degree of freedom and financial independence. They may have a job, pay rent, charge expenses on a credit card, etc., and they may accrue debt or legal liability for unpaid bills. However, even if the third-party special needs trust is funding significant aspects of the beneficiary’s expenses, such as housing, food, and medical care, creditors cannot come after the trust assets for debts of the beneficiary. Assets are owned by the trust with legal title in the trustee and not the beneficiary.

What happens to any trust funds remaining when the beneficiary passes?

The trust or trustee can name a successor beneficiary to benefit from the trust if the original beneficiary dies. When a successor beneficiary is named, the trust assets never become a part of the beneficiary’s estate and cannot be attacked by creditors of the person with special needs, even if he or she died in debt. Importantly, the government also cannot come after trust funds for reimbursement of Medi-Cal or other benefits it provided, which is not always the case with first-party trusts.

Call the Feldman Law Group in Walnut Creek to Discuss a Third-Party Special Needs Trust

If you think your child, grandchild or another person with special needs may benefit from a third-party special needs trust, call the Feldman Law Group to speak with a skilled, knowledgeable and experienced special needs estate planning lawyer. From our office in Walnut Creek, we serve clients throughout Contra Costa County and the East Bay.

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