If you currently provide care for a child or a loved one with special needs, you might have concerns about what will happen to them when you are no longer able to provide care for them. You may also worry that if you leave any assets to your child, they may lose their eligibility for public benefits. However, there are options available to help you navigate these challenging circumstances.
What Is a Special Needs Trust?
A special needs trust, also known as a supplemental needs trust, is a good option for individuals who want to provide for the needs of a disabled family member without disqualifying them from government benefits. This trust is designed to hold a person’s bequests, gifts, or proceeds from a lawsuit settlement and protect them from common problems that may arise when a person provides for the financial security and continuing care of a loved one.
What Can a Special Needs Trust Do?
A special needs trust can:
- Ensure that a beneficiary’s money is managed correctly and that the disbursements are used for the beneficiary’s sole benefit.
- Make sure that the beneficiary continues to receive public benefits, such as Medicaid benefits. This is because money placed in a special needs trust is not counted when determining a person’s Medicaid eligibility or Supplemental Security Income (SSI) eligibility.
- Protect funds that were received from a settlement.
However, to better understand what a special needs trust can do for you and your family, reach out to an experienced Northern Virginia estate planning attorney today to review your options in detail.
How To Set Up a Special Needs Trust in Northern Virginia?
There are several ways to create a special needs trust in Northern Virginia.
A First-Party Special Needs Trust
A first-party special needs trust is a type of trust that holds the beneficiary’s own assets. These funds are utilized for the beneficiary’s benefit throughout their lifetime. However, upon the beneficiary’s death, the remaining assets will be used to reimburse the government for the cost of medical care.
A Third-Party Special Needs Trust
A third-party special needs trust is a trust established by family members to help an individual with special needs. The trust can hold a variety of assets, such as stocks, bonds, investments, and even property. In addition, this type of trust functions like a first-party trust, meaning that the assets in the trust will not affect the beneficiary’s eligibility for government benefits.
However, there is no payback provision in third-party special needs trusts. This means that upon the beneficiary’s death, any funds remaining in the trust can be passed on to a charity or other family members without having to be turned over to the government.
A Pooled Trust
A pooled trust is established and managed by a non-profit organization. Each beneficiary has a separate account, but these trusts are pooled for investment purposes. After a beneficiary passes away, the remaining funds are used to reimburse the government, and a portion of the funds is also given to the non-profit organization that manages the trust.
Get Help With Your Future Plans, Contact Ardent Guardian Today
If you are interested in learning more about special needs trusts and how they can benefit your loved ones, reach out to Ardent Guardian today. Our team can provide you with an in-depth overview of what special needs trusts entail and guide you through the process of securing your loved one’s future.
