Picking The Right Special Needs Trust
Planning for the future is important, particularly if you have a loved one with physical or mental disabilities. One way to provide for their future after you are gone is through the establishment of a special needs trust. There are two main types of special needs trusts, each with their own benefits and drawbacks, and an experienced estate planning attorney can help you determine which is best for your situation. At Fisher Law LLC in Norwood, our knowledgeable attorneys are here to help you establish a special needs trust for your loved one. To learn more, call or contact our office today.
First Party Special Needs Trusts
The first type of special needs trust is known as a first party trust or a “self-settled” trust. This type of special needs trust is created with assets that are owned by the person with physical or mental disabilities. Typically, this type of trust is used when a person with disabilities inherits money or property or receives a court settlement. A first party special needs trust is also utilized when a person becomes disabled later in life due to an illness or injury and owned property prior to that in their own name.
A self-settled special needs trust can be established by a person’s parent, grandparent, guardian, the court, or by the person with special needs so long as they are deemed mentally and legally competent. Any property placed in the trust must be used for the sole benefit of the person with special needs. After the beneficiary’s passing, any remaining funds in the trust up to the amount of state and federal benefits paid to the beneficiary over the course of their lifetime are paid back to the government. Any assets remaining can then be distributed to remainder beneficiaries.
Third Party Special Needs Trusts
The second type of special needs trust is a third party trust, which is established and funded by others for the benefit of a person with physical or mental disabilities. Anyone can establish a third party trust, including parents, grandparents, and siblings, and they can be created as part of an estate plan or set up during the lifetime of the trust creator.
If established properly, a third party special needs trust allows for a person with special needs to collect state and federal benefits without forfeiting the assets in the trust. The third party trust can be used to cover additional expenses that public benefits do not. Upon the beneficiary’s death, assets from a third party trust are not subject to repayment, and any property left in the trust can be immediately distributed to remainder beneficiaries.
Call or Contact Us Today
Do you have more questions about what type of special needs trust is right for your family? If so, the dedicated and experienced Norwood estate planning attorneys at Fisher Law LLC are prepared to provide you with top tier legal assistance. To learn more, call the office or contact us today to schedule a consultation of your case now.
Source:
law.cornell.edu/wex/special_needs_trust
