You want to keep your loved ones safe. When you have a loved one who has special needs, there may be additional measures that you must take.
To aid in providing for a loved one with special needs, there are special needs trust options available. Before selecting the one for you, it is important to understand certain aspects of each choice.
This is becoming more popular with the passing of the Special Needs Trust Fairness Act, which went into effect in 2016. It allows the individual with special needs to set up a special needs trust of their own accord. It is important to note that a family member may set up this trust as well, and the disabled party must meet certain requirements to qualify for the trust. Parties may utilize the trust to manage an inheritance, a settlement, life insurance payments or other assets.
A third party trust is very common. Guardians or family members of an individual with special needs are able to create this type of trust. In many cases, parties use the trust to pay for various needs or desires of the individual with special needs, such as the following:
- Personal services and expenses
- Classes or hobbies
A trustee manages the trust and makes all allocations to ensure the proper usage of the trust. In that vein, funds must go directly to the activity or service and the beneficiary cannot receive cash payments.
Similar to a self-settled trust, a disabled party or family member can create a pooled trust. With this type of trust, family members and loved ones are able to contribute to the fund jointly, or “pool” their monies together.
This is just an overview of the different special needs trusts that are available. If you are considering any of these options, take some time to review the trust, its requirements and any stipulations, to ensure it is the right choice for you and your loved one.