The trustee is the person or entity responsible for administering the trust. The trustee must follow the instructions of trust makers and law concerning trusts and distributions. The trustees will decide who the trustees or initial trustees are. The trust maker will often name themselves as the initial trustee, even if they are not the beneficiary – the Trust maker names successor trustees.
The successor trustee is the person/entity that manages the trust after the initial trustee.
Special needs trusts often have a successor trustee who is a professional trustee such as banks or trust companies. A corporate trustee can be consulted by family members and beneficiaries about the wishes and needs of the beneficiaries. However, the trust company would manage trust assets and make lawful distributions to the beneficiary.
Trust makers should be concerned about naming a trustee (whether initial or successor). Trust Makers often have someone in their lives who is trustworthy and can serve as a successor trustee. They are often chosen because they will be familiar with the wishes, needs, and wants of the beneficiary with a disability.
These trust trusts have specific requirements. A person with a disability can’t serve as a trustee of his/her own trust. When establishing trusts, there may be other restrictions that apply to a particular situation. A competent attorney should discuss these with you.
What assets are allowed to be kept in a trust for special needs?
Often, especially in Third Party Discretionary Trust cases, assets are not transferred to the special needs trust. The trust then becomes an empty shell that awaits a future event and can still be used to store gifts, such as treasure chests, from aunts, grandparents, uncles or other relatives who wish to gift a person with a disability.
A trust can hold any asset, including cash, personal property, and real property. The trust is the rightful owner of the property. The trust can hold various assets, just like a treasure box that can contain gold, diamonds, and rubies. However, some pooled trusts won’t have certain assets. This is determined on a case-by-case basis.
How can I use the assets in an estate to help a child with a disability?
The special needs trust can be funded by an insurance policy that covers both the parents individually and together. This allows for a divided estate among the typical children, and life insurance can provide an independent and liquid inheritance for the child.
Parents with disabled children with disabilities worry that their retirement and medical care needs will drain their estates, leaving little or no money for their children. They need a retirement plan and a special needs plan to support their child. Parents might want to split their estate equally between their children and then purchase life insurance to pay for the unique needs trust upon their death.
What is a memorandum or Roadmap?
Parents of a child with special needs trust cannot instruct trustees on how to spend trust assets. Parents can create a memorandum or Roadmap or another document that describes their child’s wants, needs, and the activities that make them happy.
Is it possible to leave my family home to my child with disabilities at my death and keep the government benefits for that child?
Yes, However, it is essential to consider whether this is the right thing to do. While a home is not countable as a resource for Medicaid and SSI, it may be if an individual move out. The proceeds of the sale of the Ohio House will be counted as a resource if the home is sold. A disreputable person could try to exploit an individual to move into or take over the home.
It may be better to transfer a home to trust for these reasons. You should carefully consider these decisions and the possible impact on benefits and individuals with disabilities.
What are the types of “Special Needs Trusts?”
1) There are four types of trusts that allow you to accumulate assets that do not exceed your resource limit. You can break them down into two categories: Non-Payback and Payback.
2) Payback trusts stipulate that money in trust must be left to Ohio upon the death of the beneficiary.
3) Non-Payback trusts allow money left in the trust after the death or incapacity of a beneficiary to be held in trust and distributed by the Trust maker(s), usually to the relatives of the original beneficiary.
4) To avoid any loss or reduction in benefits, all expenditures from these trusts are restricted to/for items that Government Benefits do not cover. These are generally quality of life expenses: vacations, clothing, and legal fees. The trustee should exercise extreme care when spending trust funds.
Which trust is right?
The trust type available to a person will depend on the assets that are financing it. Contact Rathburn & Associates today!