A special needs trust is an estate planning tool that can manage assets and provide for the financial needs of a person with disabilities, while ensuring that they still are eligible for government programs like Medicaid and Social Security benefits. The person who benefits from the trust is called the beneficiary.
Special needs trust benefits
There are several reasons to create a special needs trust. They are often used to provide financial support for the beneficiary, such as paying for expenses that are not covered by government benefits. These may include education, transportation and other items that support the beneficiary’s quality of life.
The trust is managed by a trustee, who has a responsibility to act in the beneficiary’s best interests. The trustee must manage the trust’s assets appropriately and distribute funds according to the trust’s instructions.
One of the benefits of a special needs trust is that it allows flexibility to meet the beneficiary’s specific needs.
Creating the trust
The trust document must clearly state the terms and conditions of the trust. You will also need to decide who will act as trustee. This could be a friend, family member or a professional trustee. It’s important to choose a responsible person who understands that this is a significant, ongoing role. The trustee must keep accurate records of trust transactions.
You must fund the trust, which means that you need to transfer assets into the trust. It’s important to review and update the trust periodically to ensure it still meets the beneficiary’s needs.