Special needs trust revamped
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  • 1. Katherine Wichmann Zacharias Certified CoveredCA Insurance Agent Tax Free Retirement Specialist (619) 208-7717
  • 2. For Families & Friends who care for a loved one with a disability, the thought of not being there someday can be overwhelming. • You are not alone • The best time to plan is NOW. • The longer you delay, the more difficult planning may become.
  • 3. Questions that Parents have: • What financial support will my loved one need when I am no longer here? • Will my loved one be able to enjoy the same quality of life that they have now? • Who will administer the trust and ensure that the funds are managed and used for the benefits of my loved ones? • How can I ensure that needed SSI and Medicaid benefits will not be jeopardized?
  • 4. How a Special Needs Trust Works Parents (or relatives) Establish a Trust Government Benefits Special Needs Trust Discretionary Payments If Funded with Life Insurance, at Parents’ passing, trust funded with DB proceeds Disabled Child Supplementary Needs: • Telephone • Medical Care • Special Equipment • Education • Entertainment, etc… Basic Needs: • Food • Shelter • Clothing Cash or Assets Life Insurance premiums gifted to Trust.
  • 5. Items to Consider: • Parents can Act as the Trustees. • Trust should be separate from the Family Trust. • The trust may be revocable or irrevocable. • Final beneficiaries should be named to receive the trust assets after the disabled child dies. • Family members should discuss the future management of the trust and how it will be funded.
  • 6. This is a highly specialized document and should be drafted by an attorney who is experienced in the areas of disability, government benefits and estate planning.
  • 7. How is a special needs trust typically funded? • Cash • Investments (e.g. stocks, bonds) • Retirement plan benefits (pensions, 401(k), IRA) • Personal & Real Property • Proceeds from a personal injury settlement (applies to self settled trusts) • …and Life Insurance
  • 8. Why Life Insurance? • Provides the leverage of assets to fund trust. • Permanent Insurance • Survivorship • The sooner established, the lower the cost. • Lock in parent’s insurability
  • 9. What else should you consider? • Selecting a Trustee – A trustee is a person or institution selected to administer a trust and manage its assets. – Adheres to the terms of the terms of the trust & fulfills your objectives. – May name yourself or another family members or attorney, bank or professional trustee. • Pros & Cons for each…consult attorney • Providing a Letter of Intent – Draft a letter that outlines how you want your child cared for after you’ve gone. – Not legal document, but can provide guidance for others involved as to your wishes. – The letter may address such issues as your child’s medical needs, daily routine, interests, likes, dislikes, religious practices, living arrangements, social activities and degree of self-sufficiency. – Ensures your child’s transition goes as smooth as possible.
  • 10. Informing Family Members Siblings & other family members Explain Trust Explain now to avoid family conflicts later. What else should you consider?
  • 11. Other Special Needs • What about a child with drug/alcohol addiction problems? • What could the implications be for a child with addictions to inherited large sums of money? • Talk to your Estate Planning Attorney on how to address these issues.
  • 12. Katherine Wichmann Zacharias Certified CoveredCA Insurance Agent Tax Free Retirement Specialist (619) 208-7717