Special needs trust for my sister

[tahoed]

My sister (age 61) and I (age 67) are the sole and equal beneficiaries of our parents living trust. Our parents passed away several years ago. The family home, which is the only asset remaining in the trust, was sold in October 2010. I put the proceeds in trust. Prior to selling the home it sustained extensive fire damage. My sister was living in the home at the time and was rescued by fire fighters. She is currently living in an assisted care facility. She is disabled and receiving SSI and Medicaid. My wife and I live on a very modest fixed income, so we do not have the means to take care of my sister's subsistence and medical needs. I would like set up a third-party special needs trust for her and fund it with ALL of the proceeds currently in the family trust.

I am trustee of the family trust and have power of attorney. My sister is unable to handle her own finances, so I also have durable power of attorney for her.

My question is this: Can my sister legally give me her share of the trust so I can set up a third-party special needs trust for her and, if so, what legal device should we use to transfer the funds from her to me ?

 

[army judge]

My sister (age 61) and I (age 67) are the sole and equal beneficiaries of our parents living trust. Our parents passed away several years ago. The family home, which is the only asset remaining in the trust, was sold in October 2010. I put the proceeds in trust. Prior to selling the home it sustained extensive fire damage. My sister was living in the home at the time and was rescued by fire fighters. She is currently living in an assisted care facility. She is disabled and receiving SSI and Medicaid. My wife and I live on a very modest fixed income, so we do not have the means to take care of my sister's subsistence and medical needs. I would like set up a third-party special needs trust for her and fund it with ALL of the proceeds currently in the family trust.

I am trustee of the family trust and have power of attorney. My sister is unable to handle her own finances, so I also have durable power of attorney for her.

My question is this: Can my sister legally give me her share of the trust so I can set up a third-party special needs trust for her and, if so, what legal device should we use to transfer the funds from her to me ?

Ahh, a special needs trust is a very special trust.
You can ultimately be the trustee, but the funds must be held in trust by a financial institution.
You, as trustee, will approve certain expenses to be paid from the trust.
You will learn that such a trust is not easy to create, and is very tough to administer.
The IRS (and Social Security) will be all over this.

So, here's what you must do.
You will need to hire an attorney familiar with creating these trusts.
Shop around and ask professionals and attorneys who you should speak to about this.
Then the court will approve the formation of the trust and direct your attorney accordingly.
It is very complicated, so DO NOT try to do this without hiring an attorney.
I'm an attorney.
My wife and I had to create one of these for our son who has been brain dead since 2001!
So I know legally and personally of what I speak.

Get a good attorney!