A special needs trust (SNT) is primarily used to provide support in the future for a dependent, while avoiding disqualification from assistance programs provided by the government. The funds within the trust are shielded from creditor claims, including landlords, lenders and credit card companies – similar to other types of trusts. One or more trustees oversee and invest assets from the trust, and these trustees can include family members and other independent professionals.
Several types of Special Needs Trust exist, such as first-party or self-settled trust, used when the disabled individual receives a court-mandated settlement, an inheritance, or when they own property prior to the disability.
A third-party Special Needs Trust is often created and funded by someone other than the beneficiary, most often the parents of a disabled child, though not exclusively. Any family member or other person can create one. The trustee will then be able to manage the Special Needs Trust for the beneficiary, such as making financial decisions and handling assets.
The main difference between first and third-party trusts is what happens after the beneficiary dies. A third-party trust is not required to pay the state back for any Medicaid benefits that the beneficiary had. This kind of trust is useful in keeping full control of assets and funds after the beneficiary’s death.
Welfare programs are ever-changing, and it is crucial to select the particular Special Needs Trust for the situation without jeopardizing access or funds by any government assistance eligibility, which could be very costly. Additionally, the laws and rules encompassing SNTs are particularly complex.
There are benefits to having a Special Needs Trust. It can:
When your goal is to select the best option available for your loved ones, you will need to plan ahead in order to provide care for dependents coping with disabilities. This likely will require a lot of patience, research, and time, but you will be able to maximize their quality of life as well as safeguard their care in the present, and after you are unable to provide it any longer.
For more information concerning SNTs, or to make an appointment, contact us.