Special Needs Trust
Special Needs Trust
Setting up the Trust
First, you must create the trust document. Hiring a lawyer to prepare the trust will ensure that the trust is tailored to you and your loved one’s needs and functions as you want it to. The person setting up the trust, the grantor, places property into the trust to be managed by another person the trustee. Normally the grantor and trustee of the special needs trusts are, at first, the same person.
The grantor serves as trustee until he or she dies, becomes incapacitated, or resigns. Then a previously named successor trustee takes control of the trust. Any named trustee is legally obligated to follow the terms of the trust document to use the property for the benefit of the person with special needs, often referred to in the trust as the beneficiary.
Finalizing the Trust and initial funding of the trust
The trust is finalized once the grantor has signed the trust documents and their signature has been notarized. The Trust will to apply and be given an identification number from the IRS. Once that has occurred, the grantor will need to open a bank account with a minimal deposit. At that point, the trust is ready to be funded through any wills, living trusts, beneficiary designations, or other estate tools of those who want to support the beneficiary.
Normally the trust contains a small amount of money until the grantor passes away. At which point property from wills or a revocable living trust is deposited into the trust to provide for the beneficiary.
Any type of property can he held in a special needs trust, including real estate, stocks, collections, businesses, patents, etc. Since the primary purpose of a special needs trust is to use cash money to acquire items that are not covered by SSI or Medicaid, special needs trusts often sell property items for cash money.
A special needs trust is a financial tool used to provide for people with disabilities without disqualifying them from receiving government benefits such as Medicaid or Supplemental Security Income. The funds in this type of trust can be distributed to the beneficiary as needed – and without penalty – until they’re no longer considered disabled.
To maintain eligibility for these programs, an individual’s assets may not exceed the sum of $2,000. Funds held in a properly drafted Special Needs Trust are not considered assets of the disabled individual. This type of trust is a great option for providing goods and services that a disabled person would not otherwise be able to afford.