A special needs trust can be quite useful if you have a person with a disability in the family. There are different types of special needs trusts, and in this post we will look at third party special needs trusts.
People with special needs are often enrolled in government benefit programs. These would include Medicaid, which is a health insurance program, and the Supplemental Security Income program.
These government benefits are only available to people who can prove that they have significant financial need. If you are eligible on a given day, that eligibility is not necessarily permanent. A change in financial status can impact your eligibility.
This would come into play if a person with a disability was to receive a direct inheritance. To account for this dynamic, you could make a loved one with a disability the beneficiary of a third party special needs trust.
A third party special needs trust is a trust that is funded with assets that do not belong to the beneficiary. A third party funds the trust.
If you create a third party special needs trust for the benefit of a loved one, you name a trustee to administer the trust. The trustee handles the assets that have been conveyed into the trust. To preserve government benefits, the beneficiary cannot directly access the funds.
Under program rules, the trustee can use the trust’s assets to improve the beneficiary’s quality of life without impacting benefit eligibility. The assets in the trust can be used to pay for things that the government benefits do not cover.
With a third party special needs trust, the Medicaid program would not seek reimbursement from the estate of the beneficiary after the beneficiary’s death.
There is another type of special needs trust called a first party or self-settled special needs trust. A self-settled special needs trust is funded with assets that are owned by the beneficiary.
When this type of trust has been established, eligibility for Medicaid can remain intact throughout the beneficiary’s life. However, after the death of the beneficiary, the program would seek reimbursement from the beneficiary’s estate.
Special Needs Planning Report
We have provided some basic information about third party special needs trusts in this post. If you would like to learn more, download our special report.
This report is being offered to our readers free of charge at the present time, and you can access your copy through this website.
If you would like to obtain the download, visit this page and follow the simple instructions: Special Needs Planning.
Our firm offers free consultations to people who are ready to take action. To set up an appointment, send us a message through this page: Grand Forks ND Estate Planning Attorneys.
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