Special Needs Trusts
A special needs trust is a type of trust designed to provide a person with a disability with assets to enhance his quality of life, while at the same time, allowing that person to remain eligible for needs-based public benefits, like Supplemental Security Income (SSI) and Medicaid.
There are two main types of special needs trusts:
- First-Party Special Needs Trust, and
- Third-Party Special Needs Trust.
A First-Party Special Needs Trust holds assets that belong to the trust beneficiary, or the person with a disability. While the assets are held in the First-Party Special Needs Trust, the person with a disability remains eligible to qualify for and receive public benefits.
A Third-Party Special Needs Trust is funded with assets that never belonged to the trust beneficiary. A Third-Party Special Needs Trust is often established by a parent or family member to assist the person with a disability.
With either a First-Party or Third-Party Special Needs Trust, the assets are held in the trust for the benefit of the person with the disability, but the assets held in the trust do not affect the trust beneficiary’s access to public benefits. Additionally, the assets can be used to pay for the trust beneficiary’s supplemental needs beyond those covered by public benefits.
While special needs trusts are complicated and the rules complex, the benefits are substantial.
Ted Hoyt specializes in Special Needs Trusts.