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Special Needs Trust Planning
A special needs or supplemental needs trust is designed to provide funds for someone with a disability while preserving the disabled person’s eligibility for important means-tested government benefits such as SSI and Medicaid.
Parents often establish special needs trusts for their disabled child.
There are two types of special needs trusts, first party and third-party. It is crucial to determine which type you have or need. The determining factor is whose property is funding the trust. If the property funding the trust comes from the disabled trust beneficiary, then the trust is a first-party special needs trust. If the property funding the trust comes from someone else, then the trust is a third party special needs trust. First-party special needs trusts are recognized under Federal law and, once established, are irrevocable. They must also contain a Medicaid payback provision. By contrast, third-party special needs trusts can be revocable and do not have a Medicaid payback provision. Special needs trust planning, along with the creation and administration of the trust, are complex. The trust must be appropriately drafted in order to protect a disabled beneficiary’s right to receive means-tested public benefits.
The experienced estate planners at Dean Law PLLC are happy to assist you so that you can provide for a disabled loved one and enhance their quality of life without causing them to lose their means-tested public benefits.