Families caring for a disabled person can benefit greatly from establishing a Special Needs Trust. It is a highly efficient way for a disabled individual to receive money and gifts directly without forfeiting government assistance qualification.
There are specific guidelines for setting up a Special Needs Trust to navigate the rules of programs such as Medicaid and SSI (Supplemental Security Income.)
SSI programs and Medicaid have an asset limit of $2,000. If a beneficiary of these programs suddenly comes into more valuable assets, they can become ineligible.
Toward this end, the Special Needs Trust can be used to hold such assets instead. The grantor can appoint oneself as the trustee or a trusted someone.
It is important to remember that the trustee cannot give the money directly to the disabled beneficiary, or it would constitute a direct interference with the SSI and Medicaid programs' rules. The trustee can only buy goods and pay for services.
For example, the Special Needs Trust can be used to pay for care attendants, dental expenses, education, rehabilitation, home furnishing, and more.
Depending on your state, a Special Needs Trust may also be known as:
Supplemental Needs Trust
Special Needs Trust form
Self-Settled Special Needs Trust
Third-Party Special Needs Trust
The Special Needs Trust helps people afflicted with a debilitating injury or a chronic disability. For example, if you are injured and waiting for a settlement, a Special Needs Trust could be right for you.
Another common purpose is a parent or family member setting one up for a disabled child or adult. The beneficiary can then receive gifts and payments through the trust without the risk of disqualification from government programs.
Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need from your Special Needs Trust.
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The Special Needs Trust can do so much for someone in your life with a disability. With just a few details, you can count on 360 Legal Forms to make this process easier for you.
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To create your document, please provide:
Trustor's information: The legal name and other details of the person establishing the trust.
Trustee information: The legal name and further details of the person who is managing the trust.
Beneficiary information: The legal name and other details of the beneficiary of the trust (person with a disability.)
Purpose of the trust: Explains the particular needs of the beneficiary as they pertain to the trust.
Funding of the trust: The assets placed into the trust.
Trustor's lifetime powers: Details of how the trustor can add more assets to the trust.
Trustee's administrative powers: Describes in detail the specific capabilities and limitations of the trustee.
Insurance policies and retirement plans: All insurance policies and retirement plans for the beneficiary.
Methods of distribution: Specify how the funds will be distributed.
Grantor/Trustor: The person establishing the trust
Trustee: The person managing the trust
Beneficiary: The disabled person receiving benefits from the Special Needs Trust
Fiduciary duty: The legal duty of one party to act in the best interests of another
SSI: A Social Security Administration program paying monthly benefits
Your Special Needs Trust documents must be signed and witnessed in the presence of a notary public. Both the trustor and the trustee sign the form. If necessary, you may want to consult an appropriate attorney before signing the document to ensure everything is in order.
With the Special Needs Trust document signed and notarized, the next thing to do is fund it. First, you must obtain a tax identification number for the trust from the IRS. After that, you can open a bank account with a small deposit. From there, the Special Needs Trust can be funded in other ways, including a will, a Living Trust, and other tools.
The pooled trust is an alternative to the Special Needs Trust. The former is usually managed by non-profit organizations that combine resources of several to many families. Each beneficiary would have their own personal bank account with the organization acting as the trustee of the trust.
It is not necessary to hire a lawyer to create a Special Needs Trust. But in most cases, it can be highly recommended. You may enlist the help of a proper attorney to create a bulletproof trust.
Anyone really, with the notable exception of the beneficiary of the trust. In most cases, these trusts are created by parents for their disabled children. But other family members can add to the trust as well.
Yes, a Special Needs Trust can be terminated at any time. It usually happens when the funds are completely depleted. Or when the beneficiary does not require government benefits anymore. It is also terminated automatically if the beneficiary becomes deceased.
To be effective, the Special Needs Trust must be irrevocable. After it is signed and notarized, it can only have small amendments under special circumstances, For any significant changes, you will have to create a new trust.
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