Monday, August 20, 2012
As I have previously discussed, it is important to consider using special needs trust when creating a person's estate plan if that person has a child or an adult relative with a disability. I feel the following story can illustrate why it is important to carefully structure a special needs trust.
There are times when a person who is meant to protect the disabled person actually takes advantage of his or her fiduciary position. In this particular case, the trustee of the estate of Lucia Fiorani took advantage Ms. Fiorani through theft and mismanagement of the trust. The criminal actions of the trustee continued for years before action was taken to protect the interests of the beneficiary. The misconduct was only discovered after a relative became concerned for Ms. Fiorani's well-being and where the money was going that was left by Ms. Fiorani's parents for her care. Since the discovery, the proper authorities have filed claims against those responsible pursuant to California's elder abuse laws. Thus, it is important to taken into great consideration who should be named the trustee the trust. When these trusts are well-structured, they can protect the beneficiary of the trust from losing any money that was intended for his or her beneficiary. The trust itself has no limit to the amount of funds that someone can place within the trust. In addition, the assets that are placed within the trust do not count towards a person's qualifications for social security benefits.
See Janet Brewer, The Importance of Special Needs Trusts, JDSupra.com, Aug. 17, 2012.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.