Families support one another, through both the smooth and not-so-great times. It is only understandable that a family would want to offer support for a cherished relative, especially if they need additional assistance because of a disability. State and federal law allows families to establish a special needs trust, to safeguard the disabled person’s government benefit eligibility while still allowing them to get financial support from their family. Writing a special needs trust can be confusing, but planning ahead with guidance from a lawyer can ensure that assets will be there for the loved one in need, while not risking the financial future of the rest of the family.
Usually, to get government benefits such as Supplemental Security Income (SSI) and Medicaid, someone has to remain under a certain assets and level of income. If someone were to offer assets to someone getting these benefits, it could cause them to lose their eligibility. But funds that are put into a special needs trust do not affect government benefits. The term “special needs” is used to describe any trust made with the intention of offering benefits to a disabled person without losing the benefits he or she is entitled to collect.
There are two different types of special needs trusts that may be used, including a self-funded trust and third-party trust. The former is a trust that can be made for any person with a disability under 65 years of age by their guardian, parent, grandparent, or the beneficiary themself. These kinds of trusts are written with assets belonging to the individual with special needs, such as personal injury settlements or inheritances.
By comparison, a third-party trust is funded by one person other than the beneficiary, and doesn’t involve assets they own. An example of this would be a trust established for a disabled young adult by their parents throughout a lifetime, to support a standard of living while not risking benefit eligibility. A parent may create a third-party trust by writing such requests in their will, which would then ensure funding upon the parent’s death.
As a special needs trust lawyer Fort Collins, CO families trust from W.B. Moore Law explains, it is essential that you choose a dependable person as the trustee, as they will have to make choices during the loved one’s lifetime. Furthermore, the trustee has to be given sole discretion on making contributions to the special needs trust, without consultation from the beneficiary. Funds from the special needs trust cannot be utilized to pay for needs that are covered from government benefits, such as groceries and rent. Establishing a special needs trust can be a complicated task, so many families consider speaking with a lawyer in their area who is familiar with estate planning law. By preplanning a special needs trust, it confirms that the loved one in need gets their well being taken care of and added comfort for a lifetime.