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How Can Funds Be Spent With a Special Needs Trust?

Funds from a special needs trust can be used for supplemental items that improve a beneficiary’s quality of life. This can include home repair, vehicle repair, vacation, a computer, cable TV, Internet, and educational expenses. It cannot be regularly used for food or shelter costs or distributed directly to the beneficiary because it will be counted as income to the beneficiary.

Are Special Needs Trusts Irrevocable? Why or Why Not?

Many special needs trusts are designed as revocable living trusts and are funded when the person providing the funding dies. A trust designed that way is irrevocable when it is funded. A Special Needs Trust can be initially designed as an irrevocable trust which means that the person who contributes the funds cannot remove them from the trust. In either a revocable or irrevocable trust, the goal is to protect funds from being distributed at the demand of a government entity or counted against the person as an asset when determining whether the person is financially qualified for governmental assistance.

Why is the Choice of a Trustee for a Special Needs Trust So Critical?

A trustee of a special needs trust can be a family member, friend of the family, an attorney or CPA, or a banking institution. The bottom line is that this must be someone who can be trusted to take care of the money and manage it properly.

What Mistakes Do Families Make When Considering Setting Up a Special Needs Trust?

The biggest mistake we see is the generosity of a grandparent wanting to provide for a special needs grandchild. Often, the grandparent wants to help out by making sure that child has additional funds. However, the inheritance of money by the grandchild will actually create a situation that will cost the family a lot more money in the long run. If that inheritance disqualifies the person from receiving benefits, that means the family now has to come up with that money which is likely going to cost more than what the child inherited. The grandparent sometimes assumes that the parents can take that money and set up the trust if they want to,

Do Most Estate Planning Attorneys Understand Special Needs Trusts? Why or Why Not?

If you are working with an attorney who only does wills and powers of attorney that might not be the right attorney for a special needs trust. Some attorneys consider estate planning to be only wills, which we consider to be only part of the picture.

What Qualities Should I Look For When Looking to Retain an Estate Planning Attorney?

To determine whether you are working with the right attorney for a special needs trust, you might ask them if a special needs trust is designed into the will that they prepare or if that is something for which they charge separately. You might ask them how they can predict whether a beneficiary may need a special needs trust twenty years from now. I know we cannot predict whether a special needs trust will become necessary for a beneficiary, so we include it in our regular estate plan.

For more information on Spending Funds with a Special Needs Trust, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (512) 288-3200 today.

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