The special needs trust is something that a lot of people are unfamiliar with, including some people that have special needs children. If you have a loved one that is disabled, you will want to find out as much as you can about special needs trusts.
A special needs trust is a legal entity that is created for the specific purpose of holding in trust, assets and money for someone that is disabled. The person creating the trust will name a trustee who will take care of handling the assets and money in the trust and distributing them according to the requirements of the trust. Most special needs trust are created in a way that the distribution of money and assets are restricted so that the person with special needs is not disqualified from receiving government assistance.
There are two different types of special needs trust, the self settled special needs trust and the third party trust. The self settled trust would be a trust created by the beneficiary; this is common if someone is injured in an accident and receives a large settlement. The trust would be created in order to hold the money received in the settlement so that any government assistance the person is receiving would not be affected.
The third party special needs trust is the type of trust that is created by a parent or a grandparent, and will hold assets meant for a loved one. This type of trust is often part of the estate plan and is meant to hold assets for the beneficiary.
The trustee that handles the special needs trust must be familiar with how they can distribute money and assets without causing the disabled person to become disqualified. Distributions from the trust cannot pay for any services that the government is paying for, such as housing, covered medical cared, food, etc.
The special needs trust can pay for supplemental care, such as an in home caregiver, dental care, and clothes. The trust can also own a home that the disabled person is living in, but to maintain benefits the person must be paying some type of rent for the home.
If you have a loved one that is physically or mentally disabled, you may want to consider creating a special needs trust for them; this is the safest method of leaving an inheritance without disrupting government benefits.