If you have a loved one who is mentally or physically disabled, you probably want to know what options you have when it comes to taking care of them in the future, especially when it comes to leaving them an inheritance. This is because it is not uncommon for those with special needs to require certain types of government benefits. Unfortunately, if your loved one receives money from you, it may disqualify them from getting this assistance. To make sure this does not happen, it may be a good idea to look into a special needs trust.
What is a Special Needs Trust?
A special needs trust (SNT) is a fund created for those with disabilities that helps prevent them from losing benefits from government programs after receiving a settlement. This type of trust is a popular strategy for those wanting to help their loved ones in need without risking their eligibility for specific programs requiring their assets or income to remain below a certain amount, including Supplementary Security Income (SSI), Medicaid, and government housing.
How a Special Needs Trust Works
A special needs trust will help an individual cover particular financial needs that are not covered by public assistance benefits, including medical expenses, transportation costs, and caretaker expenses. There are typically two types of special needs trusts: a third-party special needs trust and a self-settled/first-party funded trust.
A Third-Party Special Needs Trust
A third-party SNT is typically referred to as a supplemental needs trust and is funded with assets belonging to another person other than the beneficiary. The individual who creates this trust is known as the settlor, and they will appoint a trustee to be responsible for controlling the trust. This trustee will oversee the trust’s management and the disbursement of funds for the benefit of the beneficiary. By creating this trust, the assets in the trust can be used for a loved one’s benefit, and they will not prevent the individual from obtaining the government benefits they need.
One other important thing to note about these trusts is that they cannot be funded by assets belonging to the beneficiary. Instead, funding for the trust can come from life insurance policies, inheritance, or gifts.
Self-Settled/ First Party Funded Trusts
A first-party funded trust is set up and funded by the individual living with a disability using their own assets. This type of trust is usually used when an individual receives Social Security Income or Medicaid and receives an inheritance or a settlement. This is because receiving this money will disqualify them from their government benefits. However, creating a first-party funded trust will allow them to continue to receive those benefits.
To Learn More About a Special Needs Trust, Contact Losavio & DeJean, LLC, Today
If you are considering creating a special needs trust in Louisiana or want to learn more about these types of trusts, do not wait any longer to get the answers you need. Contact Losavio & DeJean, LLC today to talk to our team and figure out the best options for your family.