When going through the estate planning process, it can become overwhelming to see all the different types of trusts, and determining which ones you will need. Taking a moment to learn about what special needs trusts are, and how they can be used, is essential for many families. This blog post is written specifically to give individuals and families a good introduction to this particular type of trust.
Who Needs a Special Needs Trust?
Special needs trusts are for those who have a physical or mental disability which makes them unable to manage their own finances. The trust can be set up by a parent or guardian to help ensure the individual will not lose their government benefits, and to ensure any assets that are left to them are able to be managed properly for the beneficiary.
Who Can Set One Up?
There are three main groups who can set up a special needs trust for an individual. The most common option, by far, is a family-type special needs trust, where family members (typically parents) of a special needs child will create the trust to benefit them while they are living, and after they pass away. A similar option is a pooled trust, which has the same basic benefits, except it is funded by a larger group, or pool, of people. In this option it will typically be parents, grandparents, siblings, friends, and others who add to the trust. Finally, a court-ordered trust is an option, which is when the court mandates that the trust be created. This trust will usually be funded by an inheritance or some type of court settlement.
What Assets Can be Placed in This Type of Trust?
Deciding what assets to place into a special needs trust typically won’t be difficult. These trusts can contain most common types of assets including real estate, financial accounts, and more. Placing these assets into a trust will limit, or even eliminate, their impact on things like Medicaid benefits. It will also make them easier to manage for a legal guardian.
Things to Consider Before Opening One
When thinking about opening a special needs trust, a number of factors need to be considered. First, the person who the trust is being made for must qualify to receive it. This means they need to be unable to make financial decisions on their own due to an illness or disability. In addition, it is important to identify the legal guardian of the individual in the trust so that they can access the assets and use them as needed for the beneficiary.
Contact Us
If you believe that you may need a special needs trust, or you have some further questions, please contact ProActive Legal Care to set up a consultation with an attorney.
