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How can special needs trusts be used?

On Behalf of | Jun 25, 2024 | Trusts

Special needs trusts offer a powerful tool to provide financial support for a loved one with a disability. This trust is ideal when you worry about jeopardizing their eligibility for government benefits.

It is important to understand how special needs trusts help secure a brighter future for those who need it most.

What are special needs trusts?

Special needs trusts, also known as supplemental needs trusts, are legal arrangements designed to hold assets for the benefit of an individual with disabilities. These trusts allow beneficiaries to receive financial support while still maintaining eligibility for need-based government benefits, such as Medicaid and Supplemental Security Income.

What are the types of special needs trusts?

There are two primary types of special needs trusts. First-party trusts use the beneficiary’s own assets, such as an inheritance or personal injury settlement. Third-party trusts use funds from family members or other third parties instead. Each type of trust has its own unique requirements and implications, so it is important to understand the differences when considering which option is best for your situation.

What are the benefits of a special needs trust?

Special needs trusts offer several key advantages. Assets held in a properly structured special needs trust do not count towards the beneficiary’s eligibility for need-based government assistance. The beneficiary can use the funds to pay for expenses not covered by government benefits, such as travel, entertainment and personal care services, giving them greater independence. Finally, special needs trusts ensure the responsible management of assets for the beneficiary’s benefit throughout their lifetime.

Caring for a loved one with special needs raises complicated questions about their future after your passing. Consider how a special needs trust could enhance your estate plan for their long-term care needs.