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Special Needs Trust and Estate Planning

The Basics of Probate - Last will and testament with pen and glasses concept for legal dAn estate lawyer works with clients to ensure that their assets and property are protected from creditors, lawsuits, and other circumstances which could threaten the client’s financial security. One of the more common tools used in estate planning is setting up trusts.

Special Needs

There are many different kinds of trusts, depending on the circumstances the client has. One such trust is a special needs trust that is set up to benefit a person who is disabled. Special needs trust, also referred to as Supplemental Needs Trust, allows a person to continue eligibility for government assistance, such as Medicaid and Social Security Income (SSI), and still be able to use the assets that are in the trust.

In order to be a beneficiary of a supplemental needs trust, there are certain factors that must be considered:

  • The age of the beneficiary and whether he or she is under 65 years of age or older 65 years of age.
  • The beneficiary must have a disability that is recognized by the Social Security Administration.
  • The government benefits the beneficiary is receiving. Different assistance programs have different eligibility rules. An estate lawyer will evaluate the programs and determine how the trust should be structured in order not to interfere with the benefits.

Where the funds are coming from that are going into the trust is also a factor.

Types of Special Needs Trust

There are two types of special needs trust. The first type is called a self-settled special needs trust. This type of trust is typically established by a parent, grandparent, or legal guardian using the assets of the child in order to fund the trust. For example, if the beneficiary of the trust became disabled because of an accident or incident caused by another party and receives a personal injury award or settlement, those funds can be used to fund the special needs trust, allowing the beneficiary to still receive benefits like SSI and Medicaid.

The second type is called a third-party special needs trust. In this type of trust, the funds that are placed in the trust come from a third party, such as money from a parent’s estate plan or will.

The special needs trust must be set up as an irrevocable trust. The beneficiary must not be able to dissolve the trust – or have the trustee dissolve the trust – otherwise, it would be considered an asset and could affect the government benefits the beneficiary receives. There must also be a provision in the trust that if there are any funds left in the trust when the beneficiary dies, then those funds should be received by the Medicaid program in the state the beneficiary lives.

Contact an Estate Planning Law Firm Today

Planning for what will happen to your property and assets is important for you and your loved ones. If you would like more information or help in forming a special needs trust, make sure you speak with a lawyer who is skilled and knowledgeable in estate law. Call an experienced attorney, like a Fort Collins, CO estate lawyer from a law firm like W. B. Moore Law LLC.

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