Estate planning can be a complicated process, which is why it’s always best to consult with an attorney at every step. Planning an estate when one or more of the beneficiaries is a special needs child adds yet another variable. There are a few more steps you will need to take when you know a person with special needs is going to inherit any assets from your estate. If this is the case with your estate, here’s what you need to know.
Setting up a Special Needs Trust
Trusts are useful when it comes to estate planning because they allow for the controlled distribution of your assets. In the case of leaving an estate to a person with special needs, one common step to take is to set up a special needs trust. Special needs trusts allow for assets to not only be stored within the trust, they also allow for people with special needs to qualify for many other federal and state benefits (Medicaid, Social Security, etc.), so long as the person is under 65 years of age. The only drawback to setting up a special needs trust is that the money can only be spent on a limited number of things, which include education, transportation, therapy, etc. They are not meant to be used for groceries, housing, taxes, utilities, etc.
Check with your attorney to see how funds placed within a special needs trust can be used by a person throughout their life.
Finding the Right Person to Oversee the Trust
In many cases, special needs trusts are overseen by the courts, depending on how they are set up. The courts will sometimes require that a person be named as a trustee, a person who is put in charge of overseeing the distribution of funds from the trust. Trustees are people whose duty it is to administer assets based on the rules written in the trust. They hold the legal authority to manage property or assets in order to administer them for the beneficiary, in this case it would be the special needs child who is the subject of the trust.
It’s important to choose a reliable and trustworthy person to administer the assets of a trust to a special needs person.
Getting a Surety Bond for a Trustee
Trustees are also required in most cases to secure a trustee (surety) bond before they are allowed to begin administering the assets within a trust. As a beneficiary of a trust, you can ask the court to require the bond to be obtained to ensure the person managing the trust fulfils their duties properly. These bonds help protect the beneficiaries, providing them with financial recompense should the trustee fail to fulfil their obligation or commit any sort of malfeasance. The bond must be obtained by the trustee, even though it protects the beneficiaries. For more information on how you can obtain a trustee bond in your state, contact the surety experts at The Patrick J. Thomas Agency today.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.