Special needs trusts are planning tools that parents or other family members can use to ensure their child or loved one with disabilities can access the government benefits they need and financial security. These benefits can include Supplemental Security Income (SSI) and Medicaid. However, they have strict eligibility requirements. If a beneficiary has resources or income exceeding the eligibility amount, the beneficiary could be ineligible from receiving public benefits.
That’s where Millman Law Group can come into play. We can assist in you legalizing a special needs trust to ensure that your loved one has a high quality of life. Special needs trusts, in a nutshell, aren’t complicated to understand. However, today we’re here to teach you the difference between first-party and third-party special needs trusts.
First-Party Special Needs Trusts
We define this as a trust funded with assets belonging to a special needs beneficiary. In this case, the beneficiary typically receives assets through a settlement or inheritance. For example, SSI could cover food or shelter. However, a trustee could distribute funds into a special needs trust to pay for educational expenses, a beneficiary’s hobbies, vacations, or anything that may not be covered by SSI or deemed a necessity.
The caveat of this is that there is a Medicaid payback provision. If funds remain in the trust after the beneficiary’s death, Medicaid can file a claim against the beneficiary’s estate the medical assistance paid on behalf of the beneficiary by Medicaid. A third-party donor should never fund a first-party trust.
As the name states, a third-party SNT is a trust created by someone other than the beneficiary. The best way to use this trust is as a tool to supplement government benefits when creating your estate plan for the beneficiary. Since the trust has funds that don’t technically belong to the beneficiary but a third party, they won’t have to face a Medicaid payback provision. Leftover assets can be distributed to others as outlined by the beneficiary’s estate plan.
Each circumstance is different. If you want to secure a loved one’s future, we’d be more than happy to talk about your specific needs. Call Millman Law Group today you’d like to learn more about the nuances of special needs trusts.
An Estate Plan 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.