Minority and/or Disability Trusts are often added as a standard clause in a Will, providing that if any assets are left to a young or incapacitated person who is not receiving Supplemental Security Income (a Special Needs Trust is required if SSI is involved), those assets will be held in trust. Rarely do I prepare a Will that does not include either a Disability or a Minority and Disability Trust. It is easy to add such a Trust and it prevents the possibility that at the decedent’s death, a young adult will inherit a substantial sum of money, use that money to buy, buy, buy and then be virtually broke within a year or two. Believe me, I have seen this unfortunate occurrence on more than one occasion.
If there is no possibility that any beneficiary (including as yet unborn grandchildren) will be under age 25 at the decedent’s death, then I usually just add a Disability Trust. This normally provides that if any beneficiary is incapacitated at the time of death, then his or her share is held in trust, to be distributed by a trustee for the health, education, support, maintenance and/or emergency needs of the disabled beneficiary. A person is considered incapacitated if a court declares the incompetency in a court hearing. However, one can also be treated as being under legal disability, incompetent, or incapacitated if so certified in writing by his or her personal physician. If the person recovers and becomes competent, then the money is released to the beneficiary outright. If not, the money remains under the control of the trustee until the money is depleted or the beneficiary dies.
If any potential beneficiary is or may be under a given age (usually 25 or 30 years of age) at the time of death, then I usually add a generic Minority and Disability Trust – that combination allows money being left to anyone who is potentially too young to exercise good judgment or to anyone who is incapacitated to be held in trust. As with the regular Disability Trust, the money may be used for the beneficiary’s health, education, support, etc. The trustee invests the money and distributes it slowly over time for the benefit of the young or disabled person.