A special needs trust helps ensure that your loved one with disabilities receives the support they need while protecting their eligibility for government benefits. These trusts are specifically designed to preserve access to programs like Medicaid or Supplemental Security Income (SSI), while providing financial support from the trust’s assets.
The purpose of a special needs trust
When someone with special needs inherits money or property, they may risk losing access to crucial benefits like government assistance programs. A special needs trust prevents this. By setting up this trust, the person with special needs can benefit from the assets without losing access to important benefits. The trustee manages the assets and uses them in ways that improve the beneficiary’s quality of life without violating any program rules.
Types of special needs trusts
You can choose between two main types of special needs trusts: first-party and third-party. A first-party trust is funded with assets that belong to the individual with special needs, such as an inheritance or a settlement from a lawsuit. A third-party trust is funded by someone else, like a parent or relative, and benefits the person with special needs.
Each trust type has specific rules and regulations, but both provide the same primary benefit: access to financial resources while maintaining eligibility for government benefits.
Benefits of a special needs trust
A special needs trust offers families peace of mind, ensuring their loved one continues receiving government benefits and financial support. The trust can cover expenses like medical bills, entertainment, education, and specialized equipment, all while keeping public benefits intact.
Creating a special needs trust means you are planning ahead for your loved one’s future. It ensures they will have financial support even if something happens to you. By working with an experienced estate planner, you can set up the trust correctly and make sure your loved one will be taken care of.