Special Needs Trusts

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.