Special Needs Trusts: 10 Common Mistakes

Special Needs Trusts can be very complex and difficult to understand. It is imperative for individuals to consult a qualified attorney who specializes in Special Needs Trusts to ensure the trust doesn’t inadvertently cause a problem for the beneficiary of that Special Needs Trust.

Eligibility for public benefits may be adversely impacted if a Special Needs Trust isn’t handled properly. The WG&L Estate Planning Journal reminded trustees a few years ago that they must be sure to follow strict rules when administering a Special Needs Trust to ensure that the beneficiary’s needs based public benefits are not compromised.

Here are 10 common mistakes that occur with Special Needs Trusts:

1. Confusing Public Benefit Programs
2. Failure to Keep Current with Trust Administration Laws
3. Confusing First Party and Third Party Special Needs Trusts
4. Misunderstanding the “Sole Benefit” Rule
5. There is No System for Requesting Distributions
6. Trustee Refuses to Make Distributions
7. Failure to Distribute for Food or Shelter
8. Distributing Cash Directly to the Beneficiary or Reimbursing the Beneficiary
9. Failure to Maintain Excellent Records
10. Trust Termination and Disbursement Priority

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