A special needs trust is a valuable estate planning tool for many families. Through a special needs trust, an individual who qualifies for Social Security disability benefits may retain eligibility for those benefits while gaining access to supplemental funds for entertainment, amenities, and other aspects of life not covered by Supplemental Security Income (SSI) or similar programs.
Specific information about the uses and benefits of a special needs trust in Lombard may be obtained from a trusts and estates attorney acquainted with the circumstances of a particular case. A lawyer familiar with all the different types of trusts could create a trust tailored to the family’s goals.
State and federal laws provide for three types of special needs trusts. The functions of these trusts are essentially the same in terms of the benefits they provide to individuals with special needs.
Differences between the types of special needs trusts primarily involve issues such as the age of the disabled individual, the trust’s funding, and the distribution of the trust’s remainder after the beneficiary’s death in Lombard. The party establishing the trust may also differ.
This type of trust is referred to as “self-settled” because it is funded with assets owned by the disabled individual who would be the trust’s beneficiary. Sometimes, a self-settled special needs trust can be established when an individual with special needs receives an inheritance or money from a personal injury lawsuit in Lombard.
A self-settled trust may be established only for an individual under age 65. If the individual is legally competent and does not have a legal guardian, they may establish their own self-settled special needs trust. In many situations, however, the trust is created by a parent, grandparent, guardian, or court.
First-party or self-settled trusts must specify that if the trust contains remaining funds after the death of the beneficiary, that money must be used to reimburse Medicaid for any benefits received through the Medicaid program.
In contrast to a first-party or self-settled trust, a third-party special needs trust is funded with assets of another person, often the beneficiary’s parents. Through a third-party special needs trust, parents or others may provide funds for a disabled individual’s use without compromising the individual’s ability to receive SSI payments or other income subject to an asset requirement.
As suggested by the name, a third-party special needs trust is funded by contributions from others and established by someone other than the beneficiary. A third-party special needs trust may be set up for an individual of any age in Lombard, and residual funds need not be used to reimburse the government.
A third type of special needs trust is a pooled trust. In this trust environment, a nonprofit organization must serve as trustee. Funds are pooled for investment, but beneficiaries retain individual accounts.
In most situations, a pooled special needs trust may be created by a disabled individual, a parent, a grandparent, or a guardian in Lombard. There is no age restriction for the beneficiary of a pooled trust.
It could be challenging to determine which type of special needs trust in Lombard is right for a given situation. Moreover, it is important to ensure that the trust selected is properly established to avoid legal complications that could affect eligibility for government programs.
A trust and estates lawyer could assist in creating the right special needs trust for a particular situation. Just a small amount of time spent in preparation now could make a tremendous difference in the years ahead. Call now for an initial consultation.
