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Special Needs Trusts

Is a Special Needs Trust Beneficial for Public Benefits Applicants?

Many assume that the use of a special needs trust (SNT) is limited to medical items or items directly related to the disability of the beneficiary. This is actually not accurate because the phrase “special needs” is used with a fairly broad definition. The actual legal phrasing used in virtually all special needs trusts that limits the use of funds to special needs with “special needs” defined as anything that is not provided by the Trust beneficiary’s public benefits programs. Public benefit programs are designed to provide for critical items/essential needs, not supplemental items to improve the quality of life. This...

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The Pros and Cons of a Special Needs Trust

Parents of special needs children often worry about protecting the financial future of their child. Numerous options can be used to meet the challenge. One option is the special needs trust. If you are the parent or guardian of a special needs child and you are worried about safeguarding their financial future in case something happens to you, a special needs trust is probably a good idea. Special needs trusts provide a financial provision for someone with special needs. Many individuals with special needs receive federal government benefits. These benefits are accessible through adherence to strict qualification rules regarding the allowable...

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The Duties of a SNT Trustee

Are you considering taking on the duties and responsibilities of a trustee of a special needs trust? If so, you probably have questions about exactly what those duties and responsibilities are and what it means to be a SNT trustee. While there are many potential duties, these five responsibilities will constitute the majority of what a SNT trustee will need to manage. Duties of a Special Needs Trust Trustee: Make Distributions from the Trust: The trustee is legally required to abide by the terms of the trust when making distributions. Before the SNT trustee can make a distribution, they must...

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The Two Types of Special Needs Trust

Special Needs Trusts (SNTs) fall into one of two categories: first-party SNTs and third-party SNTs. The first step in creating a special needs trust is determining which type you need, which will depend on whose property funds the trust. If the property funding the trust originates with the beneficiary of the SNT, it is a first-party SNT. If the property funding the trust belongs to someone other than the beneficiary, it is a third-party SNT. The Third-Party Special Needs Trust: Commonly used by individuals planning in advance for a loved one with special needs, parents of special needs or disabled individuals...

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Assigning a Trustee to a Special Needs Trust

If you are interested in creating a Special Needs Trust (SNT), one of the first decisions you will need to make is who to designate as the trustee. The rules do not allow for the trustee to be the beneficiary (the individual with a disability) or their spouse. If the beneficiary of a special needs trust or their spouse is the designated trustee, the funds held in the trust would automatically be considered a resource, or asset of the beneficiary under Supplemental Security Income (SSI) and Medicaid rules. Since trust assets would then be regarded as countable assets, the beneficiary...

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Estate Planning for Families with Special Needs Children

Families who have special needs children have to take extra care when creating their estate plans. Regardless of whether their special needs child is a minor or an adult, it is critical that they consider the possibility of the child’s needs now and in the future. Will the child need to receive needs-based public benefits such as SSI or Medicaid? Will they have what they need and still be able to qualify? Estate planning considerations for a special needs child will depend on the child’s age, their level of competency, the family, and other considerations. The goal is simple: to use...

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What is a Supplemental Needs Trust or Special Needs Trust?

A special needs trust or supplemental needs trust as they are sometimes called, allows individuals to designate special needs individuals to receive gifts, legal settlements, or other funds without losing their eligibility for government benefits programs. This type of trust is drafted so that the funds are not considered as “belonging” to the beneficiary when their eligibility for public benefits is being determined. Special needs trusts (as the name implies) are designed to pay for comforts and luxuries that could not be paid for by public assistance funds. They are not intended to cover basic support costs. Instead they are designed...

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Tax Savings with Special Needs Trusts

The Special Needs Trust, sometimes referred to as Supplemental Support Trusts, provide support for someone that receives means tested benefits such as Medicaid or Supplemental Security Income (SSI) without affecting their eligibility for the benefits.  After a Special Needs Trust is established and funded, it is very important that the administration of the account be handled according to the rules regarding qualifying expenses. In order to qualify as a special needs trust, only specific expenses can be paid for using trust assets. In too many cases, a beneficiary is unintentionally disqualified from receiving their SSI or Medicaid benefits when expenses...

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