This document discusses special needs trusts and how they can provide financial support for disabled individuals. It notes that planning for the future care of a disabled loved one is best done now rather than later. It then provides details on how special needs trusts work, including that they allow government benefits to continue while providing supplementary funds, and are typically funded through cash, assets, retirement accounts or life insurance. The document recommends consulting an experienced estate planning attorney to properly establish a legally valid special needs trust tailored to an individual's needs and situation.

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