Special Needs Planning

Finally! A Treatise on Special Needs Trusts

I am pleased to announce that a treatise on special needs planning has finally been published.  As an author of the treatise, I want to tell you all about it.  It has been published in two volumes by the Continuing Education of the Bar, a California educational publisher.  The treatise will be available on February 29 and can be pre-ordered at www.ceb.com.

Here is how CEB describes the book:

Book Review: Nolo Special Needs Trusts

Nolo Press, publisher of a wide array of self-help books, has recently released Special Needs Trusts: Protect Your Child’s Financial Future 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, Getting Paid: How to Collect from Bankrupt Debtors, The Independent Paralegal’s Handbook: Everything You Need to Run a Business Preparing Legal Paperwork for the Public, and Collect Your Court Judgment (How to Collect When You Win a Lawsuit), A Dictionary of Patent, Copyright and Trademark Terms, and The Living Together Handbook.

While the book provides a user-friendly overview and can be helpful in illustrating the effects of inheritances and income on government benefits, it has a number of serious shortcomings.

The shortcomings are perhaps related to the limited target audience of the book: people with small special needs trusts. Of sixteen examples that mention specific dollar figures, not one is over $300,000. The average 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 mentions the fact that trusts should take account of the many differences between states.

The author also 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 the 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 that 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 acknowledge many other situations where the trust won’t work. Here are a few of the traps for the unwary that the author does not warn the reader about.

• – Many worthy pooled trusts that are available only through attorneys
• – The Nolo boilerplate trust includes avoidable risk that 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 6 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 acknowledged 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 that child.