Estate planning is crucial for every parent eager to provide for their children in the future. However, parents of children with special needs may be even more concerned about how they can best provide for their child in a number of situations. The Millman Law Group can help you create a comprehensive estate plan with a special needs trust that prepares you for the future. What makes special needs trusts different from others, and how can they help your child? Keep reading to learn more about these trusts, and then schedule a meeting with your Millman Law Group attorney to discuss your particular needs.
The Basics of Special Needs Trusts
A special needs trust, sometimes referred to as “supplemental” needs trust, is an irrevocable living trust. It is designed to protect assets intended for a beneficiary with special needs while simultaneously protecting that beneficiary’s eligibility for federal or state assistance programs.
When Is a Special Needs Trust Necessary?
Children who are minors cannot inherit directly from a parent. A trust is therefore used to protect the inheritance of a minor. Once the children reach the age of majority, parents often revise their estate plan so that assets are gifted directly to their children.
However, gifting assets directly to your child at any age is challenging if you are a parent of a child with special needs. This is because your child likely depends on assistance programs, like Medicaid and SSI, for support throughout their life.
Eligibility for these programs depends on the person’s income and assets. If you give them assets directly, they can become ineligible for necessary assistance programs. Special needs trusts help resolve this problem by allowing you to pass down your assets without influencing assistance eligibility.
First Party Special Needs Trusts
Also known as a “self-settled” trust, this type of special needs trust is established by using the assets of the person with special needs. The trust is established by a parent, grandparent, guardian, or court, but it is funded using assets owned by the beneficiary.
This type of special needs trust is often needed when someone with special needs or disability receives a lump sum of money. With a first-party trust, any assets remaining in the trust upon the beneficiary’s death must be used to pay back Medicaid.
Third-Party Special Needs Trusts
This trust is established by a third party with assets owned by that party for the benefit of the person with special needs. A parent or other family member often establishes this trust to benefit their child or heir with special needs.
This trust is funded by using assets gifted by the family member. The trust must include specific language that indicates the assets in the trust are distributed to a third party to be used for the person with special needs. Because the assets are not directly available to the beneficiary, they do not disqualify that person from eligibility for assistance programs.
Estate Planning Made Easy With Millman Law Group
Millman Law Group, PLLC is rare because it’s one of the only law firms that offer life planning in South Florida. From life care planning to the preparation of detailed estate plans, Millman Law Group has committed to serving Floridian elderly communities in Boca Raton, Palm Beach County, Ocean Ridge, Hillsboro Beach, and many other areas since 2018. Our dedicated team also specializes in special needs trusts and catering to any age demographic because we know for certain it’s never too early to start preparing you and your family for your future. For the latest news in estate planning and elder care law, follow us on Facebook, Twitter, Linked In, and Pinterest. You can also contact us at 561-463-6480.