During a recent Facebook Live event hosted within our “Circle of Care” Facebook Group, Special Needs Companies founder Annette Hines discussed all things special needs planning and special needs trusts.
Essentially, special needs planning serves to connect your long-term goals for your special needs child or loved one with financial assets and key documents. One of these documents is a special needs trust.
There are two types of special needs trusts, and they are distinguished by the types of assets placed within them and who creates them.
Supplemental Needs/3rd Party Trusts
When parents or legal guardians are planning to provide for the benefit of their special needs child or loved one, they are most likely using a Supplemental Needs Trust.
Sometimes this trust can be used as a gifting vehicle for parents to contribute to during their lifetime, but most often this trust is used to transfer an inheritance when they pass away. These trusts have many positive aspects that we highly recommend and use frequently in our special needs planning and trust services.
Self-Settled/d4A/OBRA ‘93 Trusts
If you are planning with your own assets as the disabled person, this is the trust you should be using.
Some of the most common reasons we see people using this type of trust include:
- To minimize assets and manage income streams – Many public benefits require income tests in order for applicants to receive help, meaning individuals over a certain income level will not qualify for assistance. This can be detrimental for disabled individuals who need such benefits but have received a large sum of money that is counted as an income stream. If you’ve had an accident and you have a settlement heading your way, or you have an inheritance coming in and you need to do something with the money to prevent it from interfering with your ability to qualify for public benefit programs, this is the type of trust you should use.
- A means of paying child support, alimony, or spousal support
- Asset protection through divorce settlements
To learn more about these types of trusts and how they can benefit you, watch the rest of Annette’s Facebook Live by joining our “Circle of Care” Facebook group here.
Planning for your loved one with special needs requires extensive research to become a well-educated advocate and secure their future. You will want to keep up-to-date on the latest medical, educational, financial, and legal changes. Special Needs Law Group of Massachusetts, PC provides assistance to you and your family in addressing your unique concerns. For more information and assistance, contact our legal services team today.