As an estate planning lawyer, I want to make sure that my clients are taking care of themselves and their family members. Individuals with special needs require tailored financial and estate planning. One instrument that can be used to take care of a disabled child is a special needs trust.
A special needs trust is a trust fund that is established to benefit an individual having a disability or a “special need.” The trust document is drafted in a manner that preserves ongoing Supplemental Security Income and Medicaid eligibility of the trust beneficiary while funding other expenses that add to the quality of life of the individual. These trusts should be drafted by an attorney who is experienced in this area.
A special needs trust is also known as a “discretionary trust,” a “supplemental needs trust,” a “supplemental care trust,” or an “amenities trust.” Benefits paid by the trust are made as “in-kind” distributions and the beneficiary does not receive cash which would cause the beneficiary to lose governmental assistance.
General Types of Special Needs Trusts
A third-party special needs trust is formed with assets other than the assets of the beneficiary. The third party is usually a relative or a friend who has no legal obligation to support the beneficiary.
A self-settled special needs trust is formed when the beneficiary of the trust uses their own assets to fund the trust. Usually personal injury awards belong to the disabled person and would be used to form a self-settled trust.
Depending on which type of special needs trust is created will determine how the Internal Revenue Service will tax the trust and what forms need to be timely submitted for taxation purposes. I recommend that you consult with a certified public accountant familiar with trust taxation issues so that all is done properly.
Free Consultation with a Utah Estate Lawyer
When you need help with your estate, or to take care of a disabled or special needs child, call Ascent Law for your free consultation (801) 676-5506. We will help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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