A Special-Needs Trust is a trust established for the benefit of a beneficiary with disabilities and who is eligible to receive governmental assistance. The trust's purpose is to provide support for the beneficiary beyond the Federal-aid "faucet". It is important to correctly draft this type of special needs planning. Errors can lead to the loss of government assistance and trust income.
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The trustee should have complete discretion over the payment of principal and income. Beneficiaries should not be allowed to act as trustees. Cash payments should not be made directly to beneficiaries. The trust should only pay for items the beneficiary needs. This is important because any money the beneficiary receives could reduce their Supplemental security income or result in total loss of Medicaid benefits.
In Arizona, the trustee will request a distribution from the beneficiary or their guardian. The trustee will decide whether the distribution is permissible and if it is in the beneficiary's best interests. If the trustee agrees to the distribution, then the trustee will pay the vendor directly from the trust account.
In Arizona, it is difficult to find an attorney who can draft a Special Needs Trust. A Special-Needs Trust is a complex area of law and you need someone who has experience in this field. You want someone you trust and feel at ease with. The Special-Needs Trust is intended to last the life of the beneficiary. Your attorney will also be an important part of your financial team.