A Special Needs Trust is a legal arrangement designed to provide financial support to individuals with disabilities without jeopardizing their eligibility for government benefits like Medicaid and Supplemental Security Income (SSI).  The trust enhances the beneficiary's quality of life by covering expenses that government benefits do not, such as education, recreation, and medical expenses not covered by insurance.

There are the three main types of Special Needs Trusts:

First-Party SNT. Funded with the beneficiary's assets, often from an inheritance or legal settlement.  This trust includes a payback provision to reimburse Medicaid upon the beneficiary's death.

Third-Party SNT. Funded with assets from someone other than the beneficiary, usually family members.  There's no payback provision, allowing remaining assets to pass to other heirs upon the beneficiary's death.

Pooled Trust. Managed by a nonprofit organization, pooling resources from multiple beneficiaries for investment and management purposes.  Each beneficiary has a separate account and funds are used for their benefit.

When setting up a Special Needs Trust, it's crucial to consider:

Eligibility for Government Benefits. Assets in an SNT are not counted as the beneficiary's personal assets, preserving their eligibility for means-tested government benefits.

Trustee. A knowledgeable trustee is appointed to manage the trust assets and make distributions on behalf of the beneficiary without disqualifying them from receiving government aid.

Use of Funds. Funds from the trust can cover a range of expenses that benefit the beneficiary, such as personal care, education, and transportation.  It's important to avoid direct cash distributions to the beneficiary to ensure continued eligibility for government benefits.

Tax Considerations. Special Needs Trusts come with specific tax considerations, requiring the trustee to file annual tax returns for the trust.  The tax treatment varies based on the trust's structure and the origin of the funds.

A Special Needs Trust offers several benefits including:

Enhancing Quality of Life. By covering expenses not included in government benefits, the trust enhances the beneficiary's overall quality of life.

Preserving Government Benefits.Since the trust doesn't count as personal assets, it helps maintain the beneficiary's eligibility for crucial government assistance.

Providing Long-Term Security.The trust ensures ongoing financial support for the beneficiary throughout their lifetime.

Offering Peace of Mind.For parents, the assurance that their special needs child will receive financial care is a profound source of relief.

As parents of special needs individuals, our ultimate mission is to ensure a secure and fulfilling life for our children.  A Special Needs Trust is an indispensable tool in realizing this vision, offering vital financial support while safeguarding eligibility for essential government benefits.

At LVED.com, we're dedicated to supporting you every step of the way on this journey.  Our platform provides a seamless process for creating, storing, and sharing your estate plan, empowering you to take the initial stride toward securing your child's future with confidence.

Start planning for your child's well-being today with LVED.com.

Visit lved.com to learn more and begin building a legacy of care and protection for your loved one.