Planning your life in the long-term as well as planning your estate should include looking into the different options available to you. While wills can be a good way to plan what happens to your estate after you pass away, trusts can help you to manage your finances during your lifetime.
Special needs trusts can be helpful for those with disabilities or a long-term health condition. They can help to manage finances, and can potentially provide a huge amount of benefits. There are two types of special needs trusts: first-party special needs trusts and third-party special needs trust. The following is an overview of third-party special needs trusts and how they can help to plan your life or the life of a loved one.
What are third-party special needs trusts?
These types of trusts are usually part of a plan for the future of a loved one with special needs. For example, if you have a child with a disability that will affect their independence and ability to support themselves financially, you may want to establish a third-party special needs trust.
A special needs trust exists during the lifetime of its creator. This means that if you are a parent, your disabled child will be able to receive gifts through the trust during your lifetime.
It’s important to note that the biggest difference between a third-party special needs trust and a first-party special needs trust is what happens when the creator of the trust passes away. In a third-party special needs trust, the assets within the trust will not need to reimburse expenses relating to Medicaid. This means that the creator can have control over how the remaining assets are distributed when they pass away.
Why are these trusts ideal for those with disabilities?
These trusts are ideal for those with disabilities because they prevent disqualification for government benefits while helping them to purchase necessities such as medical expenses, personal care attendants, vacations and education.
If you have a loved one who is disabled and you want to make sure that you can always provide for them, you should explore the benefits that a third-party special needs trust could present to you.