|Posted by Hundallegalgroup@gmail.com on April 17, 2017 at 3:00 PM|
If you care for a person with special needs, there is no doubt you have thought about what will happen when you are no longer able to look after him or her. Fortunately, there are many legal and governmental tools that can help. Individuals with special needs are often entitled to benefits, including social security, Medicaid, and/or disability. Legally, safeguarding these benefits by creating a Special Needs Trust (SNT) is essential.
Generally, there are two types of SNT’s. A First Party SNT is funded by the beneficiary’s own funds. Oppositely, a Third Party SNT is funded from other sources. First Party and Third Party funding sources can collectively fund a SNT as well.
Benefits of Establishing a SNT
Attorney’s often recommend making a SNT for an individual with special needs because this allows a beneficiary to enjoy use of property that is held in trust for his or her benefit while continuing to receive government benefits. For instance, it may be used for supplemental care over what the government provides. Although certain Medicaid rules say a SNT cannot be used for housing or food, these rules have certain exceptions that an attorney would know.
Additionally, you can hold and manage property intended for a beneficiary who lacks legal capacity to handle finances just as in an ordinary trust.
A SNT may be established any time before the beneficiary turns 65 years old. Many individuals establish SNT’s during the start of a child’s life to begin funding as a long-term goal. Furthermore, the cost of creating a SNT is tax deductible.
Do you need a SNT if your family is wealthy and not in need of government benefits?
A general trust cannot protect a special needs individual because funds in a SNT remain non-countable assets and allow the beneficiary to qualify for certain benefits. A general trust, however, makes assets countable and disqualifies a member from benefits.
So, the best thing you can do for your special needs loved one is to establish a SNT, guaranteeing a fulfilling life with all the protections you can possibly provide during and after your lifetime.
This information does not constitute legal advice or an attorney client relationship*