A huge part of estate planning is providing for your family. Especially when your loved ones have special needs, it’s essential to ensure that they are taken care of no matter what happens. A special needs trust is one way to look out for your loved ones after you are gone.
How Does It Work?
A special needs trust provides financial support for a dependent with special needs. The trust typically pays for medical expenses, caretakers, and transportation. The creator will appoint a trustee to oversee the assets. There are three types of special needs trusts:
- A first-party special needs trust uses the beneficiary’s property owned before or received during their disability. This often includes a settlement or inheritance.
- A third-party special needs trust involves assets placed into the trust for the beneficiary by a third party, like a parent.
- A pooled special needs trust is a common trust created by a charity or other entity to hold in separate accounts the property owned by many beneficiaries with special needs.
What Are the Benefits?
A special needs trust is meant to provide support for a disabled person, but it also has the benefit of keeping beneficiaries eligible for government programs, like Medicaid. There is a limit to how much money an applicant for government programs can have in their name, and a special needs trust helps the beneficiary meet that requirement.
In a special needs trust, the creator can specify what happens to the assets. Assets within the trust are also irrevocable, so they are kept out of reach of creditors or lawsuits.
In creating a special needs trust, you should always work with an attorney. They will help you determine exactly which type of trust is best for your loved ones and ensure that it is carefully carried out.