SHOULD YOU PUT YOUR SPECIAL NEEDS TRUST IN YOUR REVOCABLE LIVING TRUST OR A STAND ALONE TRUST?

Nov 25, 2019Trusts

The benefits of putting a special needs trust in your revocable living trust is that it is more flexible and it is changeable.  We don’t know what the law is going to be in 20 or 30 years, we don’t even know what it is going to be next week.  If the law changes in the future and your special needs trust is in your revocable living trust it is very easy to change the terms of that special needs trust, keep your child eligible for SSI and Medicaid, and still have the benefit of all the money you put in the special needs trust for them when you die.

The benefit of a stand-alone special needs trust is that it is irrevocable which might not sound like a benefit, but it can definitely be a benefit in certain circumstances.  For example if someone wants to give a gift or leave an inheritance to the special needs individual, they can just gift or leave that inheritance to the stand-alone special needs trust without having to go to the trouble of setting up a separate special needs trust or perhaps inadvertently giving the special needs individual an inheritance that disqualifies them from SSI or Medicaid.  This way other people can give money to the special needs individual and they are still eligible for their benefits.  Now if there are changes in the law in the future, the best way to protect against that and allow some changes to be made to the special needs trust is to appoint a trust protector.

A trust protector is someone who isn’t a relative, but is a trusted member of a wider circle of friends, it keeps the trust it as flexible as it can be, but will allow some changes to be made so that if the law changes the trust can still be in compliance so that the special needs individual can continue to receive benefits.

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