A special needs trust is a valuable estate planning tool for many families in Lombard. Through the use of a special needs trust, an individual who qualifies to receive disability benefits from Social Security may continue to retain eligibility for those benefits while gaining access to supplemental funds to allow 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 special needs trusts could create a trust designed to fulfill goals set by the family.
State and federal laws provide for the establishment of three different types of special needs trusts. The function of these trusts is essentially the same in terms of the benefits they provide to the individual with special needs.
Differences between the types of special needs trusts in Lombard primarily involve issues such as the age of the disabled individual, the funding of the trust, and how the remainder of the trust is distributed after the death of the beneficiary. The party establishing the trust may also differ.
This type of trust is referred to as “self-settled” because the trust is funded with assets owned by the disabled individual who would be the beneficiary of the trust. Sometimes a self-settled special needs trust in Lombard could be set up when an individual with special needs receives an inheritance or money from a personal injury lawsuit.
A self-settled trust may only be established for an individual who is under the age of 65. If the individual is legally competent and does not have a legal guardian, that person may set up 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 the first party or self-settled trust, a third party special needs trust is funded by assets of another person, often the parents of the beneficiary. Through a third-party special needs trust, parents, or others may provide funds for the use of a disabled individual without compromising the individual’s ability to receive SSI payments or other income with an asset requirement.
As suggested by the name, a third-party special needs trust in Lombard trust is not only funded by contributions from others, but also established by someone other than the beneficiary. A third-party special needs trust may be set up for an individual of any age, and residual funds do not need to be used to reimburse the government.
A third type of special needs trust in Lombard is 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 the disabled individual, a parent, grandparent, or guardian. 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 established correctly to avoid legal complications that could impact eligibility for government programs.
A trust and estates lawyer in Lombard 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.