The news media constantly relates stories about celebrities whose lives are affected by substance abuse.
Suppose you have a family member with a substance abuse problem and you want to protect him or her from using family assets in a detrimental manner. A “no-strings” inheritance can provide a troubled person with money to use, literally, toward his or her own destruction. One measure available to families is what is known as a Special Needs Trust, which, as the name implies, focuses on protection of the person for whom the trust is intended.
In a Special Needs type of trust, a trustee is appointed to oversee and manage the assets in the trust keeping the best interests of the ‘special needs’ person in mind. This blog will focus on two types of Special Needs Trusts.
A third party trust is one created by a parent or grandparent, and may be constructed with special requirements for the trustee to maintain control over the bequeathed assets on behalf of the substance-abuser beneficiary in question. This control over assets can be directed to last through a beneficiary’s entire lifetime.
Another type of a third party Special Needs Trust is the “stand-alone” or testamentary trust. In this type of trust, the creator (called a ‘settlor’) can begin placing assets into the trust at any time. Other family members as well as non-related people can contribute, and the trust itself can be named as a beneficiary. That means that settlors can bequeath assets such as life insurance policies, retirement plans, and even certain other trusts within a testamentary Special Needs Trust.
The “takeaway” here is that a person with special needs can receive ongoing support from a dedicated trust, both during and after the lifetimes of the people who love them. Whatever the conditions of these trusts, an at-risk individual can be provided for, as well as protected from their own bad habits.
For more information about Special Needs Trust matters, or for any other estate planning concerns you may have, please contact me and we’ll set up a consultation. As an experienced estate planning attorney I can help you create a plan tailored to your needs and the best interests of your loved ones. I can be reached at 818.956.9200.
