A standard special needs trust is a trust that is set up for a disabled person, and it is usually set up by their parents. This is often done for the purpose of transferring funds or property to the person, without disqualifying them for various types of government benefits like Medicaid. In most cases, the property is transferred to the disabled person when their parent(s) become deceased. However, special needs trusts can be used for other types of distribution situations.
In comparison, a court-ordered special needs trust is one that is used only under specific circumstances. These typically involve instances where the disabled person has inherited sums of money, or has been granted settlement money through a court proceeding. These types of transfers cannot be put into normal special needs trusts. Instead, they are placed into a court-ordered special needs trust, also called “Type A” special needs trust. Laws may vary by state regarding the procedures for setting up and maintaining a court-ordered special needs trust.
To begin with, there is usually some court interaction or instructions regarding the funds that are to be placed in the Type A trust. As mentioned, these are usually connected with either inheritances or court settlements. After this, the court-ordered special needs trust will need to be drafted up and created by someone on behalf of the disabled person. Only certain parties can do this, including:
Also, the disabled person must meet Social Security standards, be under 65 years of age, and must have a disability that qualifies according to other various requirements.
Lastly, it is important to note that leftover funds from the court-ordered trust will be paid back to the state of residence upon the person’s death. The calculation of the amount of funds that are repaid is based on the amount of medical assistance they received from the government.
Court-ordered special needs trusts are subject to more restrictions and monitoring due to the fact that the funds are stemming from some sort of legal proceeding in the court. More personal transfers of funds may require a different type of special needs trust to be set up. If you are still unsure as to whether a court-ordered trust is appropriate for your situation, you may need to consult with a lawyer and explore different types of trusts.
Court-ordered special needs trust are highly specific legal devices, and have many different requirements to them. You may need to hire a trusts and estates attorney if you need assistance setting up or regulating a court-ordered special needs trust. Your attorney can help you interact with the court to ensure that the trust is set up properly, and that the recipient of the funds is qualified for the distribution. Also, if you need to appear in court or file a legal claim over a trust dispute, your attorney can assist with those matters as well.
Last Modified: 02-04-2015 11:37 AM PSTLaw Library Disclaimer
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