The next four articles will be a mini-series focused on Special Needs Planning. Special Needs Trust can benefit anyone who is receiving government benefits. A good Special Needs Trust, also referred to as a Supplemental Needs Trust, can provide financial stability for the lifetime of the beneficiary, without jeopardizing his or her benefits. There are three kinds of Special Needs Trusts: Third Party, Self-Settled, and Pooled. This article will focus on the most commonly known, the Third-Party Special Needs Trusts.
A third-party trust is a trust where a family member, friend, or any person other than the beneficiary funds a trust for someone else’s benefit. The Trust can provide for the health, safety, or welfare needs of the beneficiary that are not provided by government benefits. For example – Julie was born with Down Syndrome and needs constant care. Her government benefits will provide housing, but her Special Needs Trust can supplement that benefit to provide for nicer living conditions.
The trust can also provide for independent medical expenses, clothing, electronics (like TV), vacations, and activities. The goal is to provide a more well-rounded life for the beneficiary and to supplement the basic care provided by the governmental benefits.
Another added bonus of third party trusts, Medicaid cannot take any of the money upon a beneficiary’s death to reimburse their medical expenses. Any money left in a Special Needs Trust after the death of the beneficiary can pass to other family members.
Finally, Third-Party Special Needs Trusts create a safe avenue for other family members or friends to leave IRA’s, life insurance policies, specific gifts, or money to the beneficiary. If the beneficiary were named as the direct recipient of such inheritances, he or she could be disqualified from government benefits; but a Special Needs Trust creates a vehicle to protect the assets and assurance that the funds are used for the benefit of the beneficiary.
Call Grissom Law, LLC at 678-781-9230, we have the skills, experience, and expertise to assist you in establishing a Third Party Special Needs Trust for your loved one.
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