Special Needs Trust Overview
Using a Special Needs Trust to manage the funds of a person with special needs can be beneficial. The funds can be used to cover extra expenses and provide for the person’s lifestyle. In some cases, the trust can also be used to pass down wealth to the next generation.
A Special Needs Trust is a type of trust that allows a disabled person to receive income and other benefits without disqualifying him or her from public assistance benefits. This can help families fill in the gaps left by SSI payments, Medicaid coverage, or other benefit programs.
Special Needs Trusts can be funded with the disabled person’s own assets, or by other sources. However, they must follow certain state and federal rules. These rules vary based on the type of benefit program the person is receiving.
The type of trust that you choose to use should be determined by your needs. There are several different types of Special Needs Trusts. These include self-settled, third party, and pooled trusts.
Self-settled Special Needs Trusts are created when the child has lifelong care needs. The trust is funded with the disabled child’s own assets, and the assets may be pooled with funds from a non-profit organization. The remaining assets in the trust are designated to go to the state when the child dies to repay any Medicaid received by the beneficiary.
Third party Supplemental Needs Trusts are created by a family member or other third party. The trust provides for the disabled child without interfering with Medicaid expenditures or disability income. The trust is usually created by the parents of the child.
Special Needs Trusts are complex and require state specific language as the requirements for Special Needs Trusts vary from one state to another. It is imperative that the trustee and beneficiary understand the terms in the written trust agreement. Our law office can help you create a Special Needs Trust. We can also prepare an estate plan to ensure that the estate and trust documents will meet the needs of the beneficiary, the person funding the trust, and the trustee who will be administering the trust.