In a recent post, we examined a few of the factors that you will want to take into consideration when setting up a trust. Those factors include who the beneficiary is, how much control you want to have, and what you want the trust to do. If you are interested, you can read that post in full by clicking here.
In this post, we will look more closely at one type of trust in particular and see how it addresses and reflects each of those factors. The trust is a special needs trust.
A special needs trust is typically used to benefit a person who is mentally or physically disabled. This is because these beneficiaries often collect government support, which can be terminated if they have too many assets, which could include receiving a sizable gift from someone in a will.
When it comes to how much control you want to have over the trust and its assets, there are limitations, as there are with any other trust. Under many circumstances, a special needs trust must be irrevocable. Further, when set up, a SNT is managed by the trustee, not the beneficiary, and you may need to clarify specifically what the assets in the trust can be used for.
Finally, you should understand what a SNT can do and why you might consider setting one up. Primarily, these trusts are established so that the beneficiary can receive the assets without losing Medicaid and other government benefits. If the beneficiary ever runs into trouble with creditors or legal claims, the assets in a trust can be protected.
Setting up a special needs trust can be wise decision for anyone with beneficiaries who have disabilities. If this sounds like an option you are considering as part of your estate plan, you can discuss the logistical and legal aspects of these and other trusts with your estate planning attorney.