Those with disabled beneficiaries have to take legal precautions when setting up their trust fund. If the fund is not set up with the correct legal structure it may jeopardize the disabled beneficiary’s government issued benefits. If you have beneficiaries who are disabled you might consider setting up a special needs living trust for them. A special needs living trust is used to ensure that your disabled beneficiaries receive their inheritance with disturbing their government issued benefits.
A special needs living trust allows you to leave cash and other assets to a disabled beneficiary. It can be set up at any time, and after the death of the grantor, a successor trustee takes over to manage the trust. The successor trustee is in charge of distributing the funds of the special needs living trust, and the trust ends once the funds have been depleted or if it is no longer needed.
A special needs living trust is managed by a successor trustee who should be knowledgeable of government rules to avoid improperly issuing the trust money which can result in the termination of disability benefits. A special needs living trust can only be used to spend money on particular items and services that your beneficiary needs for their daily life. Special needs living trust funds cannot be distributed directly to the beneficiary; instead they are spent on things like vacation, personal care, education, vehicles, furnishings, medical expenses, athletic training, insurance and other allowable services and items.
One important step in the process is selecting the successor trustee. The trustee should be a person that is able and willing to manage the trust fund. They should not have any conflicts of interest and only serve the interest of the beneficiary. The trustee should have a good relationship with the beneficiary so that the beneficiary can contact the trustee as needed for funds.
Any parent or person who wishes to leave their assets to a disabled beneficiary should strongly consider setting up a special needs living trust. Having a proper special needs living trust in place along with a trustworthy successor trustee can give the parents or guardians of disabled beneficiaries peace of mind that their loved ones will be taken care of after their passing.
Talk to Scott Schoeller today for more information on an Arizona special needs living trust.