What are Special Needs Trusts?
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What are Special Needs Trusts?
A special needs trust may be set up for the purpose of protecting the assets of mentally or physically disabled persons. These types of trusts can allow a disabled citizen to enjoy the use of property that is being transferred to them, without disqualifying them for various government benefits (namely, long-term nursing care and health care benefits). Special needs trusts are frequently referred to as “Supplemental Needs Trusts”.
Special needs trusts or supplemental trusts are typically set up and run by a family member of the disabled person. Great care is exercised by the court if they need to appoint a trustee to manage the trust assets on behalf of the beneficiary. The trustee will usually be a close relative, such as the parent of the disabled person; alternatively, the person’s caregiver may be selected as the trustee.
What are Some Benefits of Special Needs Trusts?
One of the main benefits of a special needs trust is that the trust property will be placed under the care of a person who is legally and mentally competent to manage the assets. In many cases, the disabled beneficiary may not be able to handle their own affairs. By placing the property under the care of a trustee, the beneficiary can be ensured that their property will be managed in a sound and reasonable way. In fact, the trustee is obligated under law to exercise sound judgment when managing the trust.
Other benefits of special needs trusts may include:
- Taxation benefits: having the property placed in a trust may often have favorable tax consequences
- State benefits: As mentioned, a special needs trust allows a person to retain qualification for government benefits like health care, nursing home aspects, and Medicaid provisions
- Fiscal advantages: Property that is placed in a trust is less subject to waste and improper spending
There may be many other advantages to using a special needs trust. These will all depend on the individual needs of each person as well as state laws. Drafting a trust properly can help reduce the occurrences of trust disputes.
When are Special Needs Trusts Used?
Special trusts needs may be used for general overseeing of assets, but they are also frequently used in specific circumstances. For instance, a special needs trust or supplemental trust may be used when the beneficiary will be receiving proceeds from a personal injury litigation or from an inheritance provision. Special needs trusts can therefore contain specific instructions regarding the purpose of the trust, as well as its termination.
Do I Need a Lawyer for Help With Special Needs Trusts?
Special needs trusts can sometimes be complex and technical, and generally require the assistance of a lawyer. You may need a lawyer if you or a loved one of yours needs assistance with a special needs trust. Your attorney can help with the drafting, reviewing, and editing processes to ensure that your trust meets state requirements. Also, you may wish to hire a lawyer if you need to file a lawsuit over any trust disputes.
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Last Modified: 03-30-2016 10:14 AM PDT
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