We at the Academy of Special Needs Planners (ASNP) are pleased to announce that California special needs planning attorney Ke...Read more
BOOK REVIEW: Special Needs Trusts: Protect Your Child's Financial Future
Stephen Elias. Special Needs Trusts: Protect Your Child's Financial Future, 2nd Ed. (Nolo Press, Berkeley, CA: 2007). 272 pages.
$23.09 from Amazon -- click on book to order.
By Diedre Wachbrit
Nolo Press, publisher of a wide array of legal self-help materials, recently issued a revised edition of this book on special needs planning by Stephen Elias. Not a specialist in this area, Attorney Elias has written a number of books for Nolo on a wide range of legal topics, including How to File for Chapter 7 Bankruptcy, The Independent Paralegal's Handbook, and Collect Your Court Judgment.
While Special Needs Trusts: Protect Your Child's Financial Future provides a user-friendly overview of the subject and can be helpful in illustrating the effects of inheritances and income on government benefits, it has a number of serious shortcomings. These shortcomings are perhaps related to the book's limited target audience: people with small special needs trusts. Of sixteen examples that mention specific dollar figures, not one is over $300,000. The average trust example cited has less than $125,000 in it.
The book is filled with warnings, including the repeated suggestion that readers keep up with legal changes and may want to work with a lawyer to do so. It also emphasizes that trusts should take account of the many differences between states. In addition, the author acknowledges several situations where the Nolo boilerplate trust won'™t work, most notably:
- If you want the trust to be able to receive gifts from other members of your family;
- If your child has money of his or her own (such as from an inheritance or settlement);
- If you want to customize your trust in any way (Nolo says don'™t change their trust language at all);
- If you want to name a corporate trustee in your trust (always a good idea at some point in your child'™s life because most of the people who you think will be good trustees will be too old to take care of your child long after you are gone).
Unfortunately for readers, the author fails to point out many other situations where the trust won'™t work. Here are a few traps for the unwary that readers are not warned about:
- Many worthy pooled trusts are available only through attorneys;
- The Nolo boilerplate trust includes avoidable risk that the trustee will foolishly terminate the trust while your child still needs it;
- Your child cannot benefit from your retirement accounts such as IRAs and 401(k)s using the Nolo trust without negative (and perhaps severe) consequences for taxes and benefits eligibility.
The Nolo boilerplate trust is a scant six pages. The trust I created for my own brother is 65 pages. I didn't make it long as an excuse to write late into the night every night. It's long because it's complete.
When the author observed that "Almost without exception, special needs trust lawyers think people shouldn't create special needs trusts themselves," I was left to wonder why readers would scrimp on the one tool that will provide for their child's lifetime care after they are gone and can do nothing more for their loved one.
Diedre Wachbrit is an attorney in Westlake Village, California, and a co-founder of the Academy of Special Needs Planners.