Estate planning is all about looking to the future, in the hopes of providing security one for oneself and loved ones. The appropriate use of the tools of estate planning can facilitate that, and one key category of tools is the trust. Trusts can help with the passing of assets without the worry of government intervention. This can be particularly helpful when one or one’s loved one lives with special needs.
People with special needs often rely on assistance from the government. But this can strike a difficult balance, especially when generous family members decide to manifest that generosity in financial terms. If the government sees this ample financial support, they’ll be all the more likely to void whatever benefits they may have been about to bestow.
The power of a special needs trust
Dealing with the “good news, bad news” scenario of gifted assets being the reason for the swiping of government assets is a startling event. By simply setting up a special needs trust, that startling life event needn’t transpire at all. Whomever the trust addresses can keep the money given and enjoy a prosperous life. If a trust is set up with the specific designation involved, the money not only will only be used for what it is set up for, but it is free from the hands of creditors or a lawsuit.
There are two key kinds of special needs trusts.
The third-party special needs trust
When people first start learning of special needs trusts, there’s a good chance that they are thinking of this kind, and it’s the one exemplified earlier in this blog. It is set up by a family member for a loved one who lives with special needs.
The first party special needs trust
As is implied with the “first party” qualification, this occurs when someone who has the special need puts their own assets in a trust. A common scenario for this is when someone with a bounty of assets suffers a disabling injury. They now must contend with their new life of going on government assistance while managing their previous assets.
For those unacquainted with estate planning, there’s a good chance that some of this blog sounded like a foreign language. And that’s okay. Setting up a positive and secure future for loved one’s or oneself is a noble pursuit, and a special needs trust can be a great way to aid those who live with special needs.