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Special Needs Trusts: Planning for the Future of a Disabled Family Member

Loune-Djenia Askew, Esq.

Jun 21, 2024

Planning for the future when you have a disabled family member requires careful consideration and thoughtful financial planning.

Planning for the future when you have a disabled family member requires careful consideration and thoughtful financial planning. 

What is a Special Needs Trust?

A Special Needs Trust is a legal arrangement where assets are placed under the management of a trustee for the benefit of a person with disabilities. This allows the beneficiary to receive financial support without owning the assets directly, which would otherwise disqualify them from certain government assistance programs.

Types of Special Needs Trusts

First-Party Special Needs Trust: Created with the disabled individual’s own assets, such as an inheritance or settlement from a personal injury claim. This trust is used to preserve the beneficiary's eligibility for public benefits after receiving a lump sum of money.

Third-Party Special Needs Trust: Established by someone other than the beneficiary, typically a parent or other family member, to provide for the disabled individual. The funds in these trusts do not belong to the beneficiary, thus they do not affect eligibility for public benefits.

Pooled Trust: Managed by nonprofit organizations, these trusts combine assets from multiple beneficiaries for investment purposes, while maintaining separate accounts for each beneficiary's needs.

Benefits of a Special Needs Trust

Preserve Eligibility for Benefits: Assets in an SNT do not count towards eligibility limits for government programs.

Financial Security: Guarantees that funds are available for the beneficiary’s additional needs that are not covered by government assistance.

Flexibility: Can be tailored to include specific instructions for the trustee on how to use the trust funds to support the beneficiary’s lifestyle and care.

Setting Up a Special Needs Trust

First, you need to choose a trustee—a reliable person or institution tasked with managing the trust and making financial decisions on behalf of the beneficiary. Next, you'll work with an attorney to draft the trust document, which details the terms of the trust and the responsibilities of the trustee. Finally, you will fund the trust by transferring assets into it, which will be used to benefit the disabled individual.

It's advisable to consult with an estate planning attorney who specializes in special needs planning. They can provide guidance on the most appropriate type of trust and all legal requirements are met to secure the future of your disabled family member.

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699.

Disclaimer: This blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.

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