Special Needs Planning

A trust is a legal arrangement in which one party, a trustee, holds legal title to and manages property for the benefit of a person, the beneficiary. Trusts can be created during life, which is called an inter vivos trust or upon death, which is called a testamentary trust.

A trust document and a will document both serve different purposes. In a will people can plan to pass their property at death only. In a trust, however, people can leave detailed instructions to pass their property over a lifetime. For example parents with young children may want a trust that provides for their children in a certain way if the parents die.

Trusts are also used to manage the transfer of property in order to minimize death taxes. Currently, death taxes only affect large estates ($3.5 million in 2009 federally; and $2 million in 2009 in Washington State).

A Special Needs Trust (SNT) can be an important tool to provide for an elderly or disabled person's needs, which are not otherwise covered through public benefits. The following are examples where special needs planning greatly maximizes the quality of life for a loved one:

• Adult Disabled Child: The parents of an adult disabled child receiving government benefits want to leave money to that disabled child when they die. Without proper planning, however, leaving money to their child will disqualify the child from receiving government benefits.

• Surviving Elderly Spouse: An elderly couple in poor health wants to leave their estate to the surviving spouse. It is likely the surviving spouse will need nursing home care. Each leaves their estate to a special needs trust for the surviving spouse. The surviving spouse then spends down their half of the assets and is able to qualify for government benefits. The half of the assets in the trust can be applied to costs that government benefits do not cover.

Through planning, a family can greatly increase the quality of life of loved ones who receive government benefits. Please see my article on
Special Needs Planning.