What are Special Needs Trusts?
Special needs trusts (SNTs) are legal arrangements designed to provide financial support to individuals with disabilities without jeopardizing their eligibility for government benefits. These trusts allow beneficiaries to receive funds for specific needs that government programs might not cover, ensuring a better quality of life.
Types of Special Needs Trusts
- First-Party Trusts: Funded with the beneficiary's own assets, often from settlements or inheritances.
- Third-Party Trusts: Funded by someone other than the beneficiary, such as family members, typically for inheritance purposes.
Benefits of Special Needs Trusts
Special needs trusts help preserve essential government benefits like Medicaid and Supplemental Security Income (SSI). By placing assets in an SNT, the beneficiary can access funds for extra expenses such as education, therapy, recreational activities, and other quality-of-life enhancements.
Creating a Special Needs Trust
Establishing an SNT requires careful planning and legal guidance. It's crucial to work with an attorney experienced in estate planning and special needs to ensure the trust is compliant with laws and meets the unique needs of the beneficiary.
Special needs trusts are vital components of proactive financial and estate planning for families with individuals requiring additional support, protecting both their future and financial wellbeing.