A special needs trust is a type of legal arrangement created to help individuals with disabilities manage their finances, while at the same time maintaining their eligibility for government benefits, such as Medicaid, Supplemental Security Income (SSI), or other public assistance programs. These trusts can be used to pay for a wide range of expenses, including medical care, housing, education, transportation, and recreation.
The danger here is that if your estate plan leaves an inheritance to a beneficiary with special needs without placing it in this type of trust, you could cause them to lose those benefits due to the value of the assets they would then have.
There Are Two Types
There are two main types of special needs trusts: first-party and third-party trusts. A first-party trust is funded with the beneficiary's own assets, such as a personal injury settlement or an inheritance. In contrast, a third-party trust is funded with assets belonging to someone other than the beneficiary, such as a parent or grandparent.
The Benefits of a Special Needs Trust
One of the most significant benefits of a special needs trust is that it can provide a level of financial security and stability for individuals with disabilities. By protecting their assets and ensuring they have access to funds when they need them, these trusts can help alleviate some of the stress and uncertainty that can come with managing a disability.
Another important benefit is that they can help families plan for the future. By setting up a trust, parents or other family members can ensure that their loved one with a disability will have the resources they need for the rest of their life, even after the parents have passed away.
What You Need to Consider in Creating One
Get a Lawyer. It's important to note that creating a special needs trust can be a complex process that requires careful planning and attention to detail. There are many legal and financial considerations to take into account, and it's essential to work with an experienced estate planning attorney.
Consider the Needs of the Beneficiary. It's also important to consider the needs and desires of the beneficiary. By taking the time to understand the individual's unique circumstances and preferences, families can create a trust that truly meets their loved one's needs.
Overall, special needs trusts can be an essential tool for individuals with disabilities and their families. By providing a way to manage assets and maintain eligibility for government benefits, these trusts can help ensure a more secure and stable future for individuals with disabilities.
Want to Know More?
If you have a child with special needs, then you need an estate plan that includes one of these trusts, funded by the assets of your estate upon your death.
If you want more information about estate plans, what documents are included, and things you need to think about to prepare them, then I recommend that you download my free book, A Guide to Creating Your Estate Plan. It will get you a long way towards achieving that goal.
But if you live in Burlington, Camden, Gloucester, Salem, or Cumberland counties, have decided that you need to put together an estate plan, and are ready to move forward to create one, then just click here to schedule a free, no obligation phone call to get things started.
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