When planning for a special needs individual, you have many factors to consider. A special needs trust (SNT) is a fund that provides for those with physical or mental disabilities. Legal entities classify these trusts based on the funding’s source, and each has different regulations.
You can choose between a few kinds of SNTs. If you’re ready to start planning for special needs trusts, you need a special needs trust lawyer you can consult when you have questions or require assistance.
Third-Party Funded Special Needs Trusts
When someone other than the disabled person creates a trust, those funds are a third-party funded SNT trust. You can organize these plans as a living trust or through a will. Third-party trusts require no payback, so the trustee can determine what happens to any remaining funds after the beneficiary’s death.
One benefit of a third-party trust is that the beneficiary can receive both external funding and government assistance. Under these trusts, family members or loved ones can provide for special needs individuals without jeopardizing their government funds eligibility. There are also contingent beneficiaries, so the trustee knows precisely where their money will go.
Self-Funded Special Needs Trusts
Self-funded SNTs protect disabled people’s benefits. If a disabled person receives a large sum from an inheritance or another asset, they can place it into a trust. In this case, the beneficiary and the trustee are the same person. Some situations require the beneficiary to find an outside party to manage the trust.
Making a sizeable income could interfere with a person’s eligibility for other government assistance. For example, if the beneficiary receives a large inheritance outside of a trust, they may lose government funds through no fault of their own. Placing this money in a self-funded trust will give them access to their funds and protect their stable income.
Pooled Special Needs Trusts
Pooled SNTs receive funding from organizations, such as non-profits. These non-profit organizations manage several beneficiary accounts.
After the beneficiary dies, the organization can return the remaining resources in their account to the larger pool to help others or use them to pay any remaining state fees.
Special Needs Trusts in PA
Each state has specific laws regarding SNT creation. Some Pennsylvania regulations for the mentioned trusts include:
- Third-party funded trusts: All third-party SNTs must be irrevocable, and the trustee must state their intent.
- Self-funded trusts: Before creating a self-funded trust, the beneficiary must repay any cash assistance received.
- Pooled trusts: Pooled SNTs must use a non-profit agency as a trustee.
If you’re ready to start planning for special needs trusts, contact a special needs trust attorney for answers to your questions.
Contact a Trusted Special Needs Attorney
Every case and client are different, and MPL treats planning your trust with care. If you’re looking for a special needs estate planning lawyer, look no further than MPL Law. We can help you determine what special needs trust is right for you and your loved ones.
Contact MPL Law today and get started on your special needs trust today.