Monthly Archives: October 2014

Special needs trusts are not just for wealthy families

A special needs trust or supplemental care trust can help families make sure their children are cared for both while they are alive and even after they are no longer there to look out of them. Although specifics vary from state to state, in general, it cannot be used to cover basic living expenses, such as food, utilities or housing. It can be used to cover important “extras,” such as transportation, computer equipment and home health aids. A special needs trust can be especially valuable to the family in pricey areas like California.

A special needs trust is a way to secure funds for a child without endangering their entitlement to government benefits. In general, having assets of $2000 or more in the name of the child will disqualify them for government benefits. Having a trust allows families to set aside funds for the child’s sole benefit without putting any of it in their name.

A trust is an instrument that can be hard to understand. This is part of why trust planning should be started at an early stage in the child’s life. Another reason to start early is to allow for time to accumulate adequate assets. Few people are wealthy enough to fund a trust adequately overnight.

However, even people of relatively modest means can accumulate trust property over time. Here are some means to finance a trust that many people may have available to then even if they are not wealthy: Life insurance; government benefits, such as Social Security survivor benefits; savings; and gifts from friends and family. Having a trust to help cover a child’s needs can protect both the child and the rest of the family. In spite of their reputation, trusts are not just for the rich.

Source:, “The Special Needs Trust“, October 18, 2014

Understanding power of attorney

In California, a legal platform that allows a person to act on an individual’s behalf is called a power of attorney. This authority may cover one specific area, such as health care, or have a much broader scope. The person who assumes this position is referred to as the agent or attorney-in-fact and is given their authority at the behest of the principal. The power of attorney may be considered durable, meaning that it remains intact even if the principal becomes incapacitated. Nondurable powers of attorney end if the principal becomes incapacitated.

Powers of attorney are created to handle many activities while an individual is not able to do so on their own. The agent may handle banking and securities, property rental or sales, tax filing, contracts, applications for state benefits, caretakers and paying bills for the principal. Those duties are outlined in the power of attorney agreement. The extent of the agent’s power is under the control of the principal and may be modified to suit the situation.

There are restrictions limiting an agent’s power. An agent may not change or draft the principal’s will or give themselves gifts from the principal’s assets. If the agent does attempt to take assets and the principal is over 65, they may be charged with elder abuse. Gifts from the principal to the agent are permitted. However, different rules may apply to gifts if the principal is incapacitated.

Having an attorney’s advice when setting up a power-of-attorney agreement may be helpful. The attorney may assist with drafting an agreement that accomplishes what the principal needs and wants, while assuring their safety.

Source: The Superior Court of California, “Power of Attorney“, October 06, 2014