Today more children with a severe disability age into adulthood, sometimes outliving parents. The disability affects a person's ability to work, or to earn above a minimum wage.  The person may experience difficulties maintaining employment.  Perhaps special equipment, technology or housing is needed.  For parents, the what ifs of adulthood need planning.  Special Needs Trusts provide a quality of life for an individual with a disability.  For families, planning for a child with a disability is crucial.  Guardianship alone is not sufficient for the needs of your child or an incapacitated adult with a disability.  

What is a Special Needs Trusts?

Special Needs Trust are an acceptable method to help a person with a disability have a better quality of life and not be forced to rely strictly on government benefits.  Today, many parents worry who will take care of their child aging into adulthood and what money will be available to help them.  Often, the task of care falls to a sibling or other family member.  It is a tool that protects a child aging into adulthood from the loss of eligibility for government benefits.  Family members meaning well, may leave an inheritance to help a child; however, money left directly to that child with a disability may disrupt eligibility and reduce government benefits.  However, money left to a special needs trust set up by a third-party may protect eligibility.

Types of Special Needs Trusts

A Third-Party Special Needs Trust allows families to set aside and use funds for a child with a disability.  It is called a third-party trust because a parent or grandparent is the one who creates the trust for the benefit of the child with the disability.   The parent may be the trustee and provide for a successor trustee.  The special needs trusts provides for the child's future care and support while protecting his or her eligibility for government benefits. The third-party special needs trust is an irrevocable trust and the funds are managed by a trustee. The Grantors of the trust cannot be the beneficiary of the trust if the child predeceases them.  Often parents name the child's siblings as future beneficiaries.  

First-Party Special Needs Trust is a trust set up by the person with the disability.  Often this type of trust is needed when a person receives government benefits and receives a personal injury structured settlement or an inheritance.  The trust is funded with assets that belong to the beneficiary.  The funds must be used for care and support that is not covered by the government benefits.  Any remaining funds must be used to payback and reimburse the government for benefits received by the beneficiary.  It is an irrevocable trust managed by a trustee and not by the beneficiary.

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