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Special needs trusts (SNTs) are a valuable planning tool for families wanting to ensure their loved one with special needs has the resources to thrive over the long term. A special needs trust can provide fiduciary management and oversight for a loved one unable to manage property or funds due to physical or cognitive limitations. This avoids any financial worry about a lack of judgment or susceptibility to financial manipulation.
Creating an SNT begins with identifying what type of trust best suits the family situation, a suitable trustee, and how to fund the trust. SNTs are not just for the wealthy. One of the simplest ways to fund an SNT is with life insurance policies. It helps maintain quality of life for a child with special needs after their parents pass.
There are several types of special needs trusts, but two main categories are first and third-party.
Other trust types include:
The specific type of SNT for your family’s situation will depend on various factors, including the source and amount of assets that can fund the trust and family goals and objectives. A special needs planning attorney can help determine which trust type works for your unique situation and needs.
A special needs planning attorney’s role is critical in creating and administrating an SNT, tailoring it to meet your family’s needs and goals. They assess your goals and inquire about your family’s financial situation, your loved one’s disabilities, and their future care needs. They also help identify the most capable and trustworthy person to become a trustee.
Once the trust type is determined, the special needs attorney can draft the document outlining the SNT’s specific terms, including provisions for funding the trust, rules for asset distribution, and who serves as trustee and successor or backup trustee. In some cases, the attorney may coordinate with other professionals, such as a financial planner or social worker, to ensure the SNT is a comprehensive plan and maintains their eligibility for government-funded benefits.
Once the structure of the special needs trust is complete, the special needs attorney can assist with funding the trust, which may involve transferring assets from your estate or coordinating with family members or third parties. The attorney may also provide ongoing advice and support, ensuring the trust is properly administered and remains compliant with applicable laws and regulations. They can also guide successor trustees who take over the role of administering the SNT.
Several myths and misconceptions about special needs trusts can prevent families from taking advantage of this valuable planning tool. They include the following:
Special needs planning attorneys are familiar with the legal and financial issues that affect individuals with disabilities and their families. Contact our office to have an attorney tailor your trust to the specific situation and needs of your loved one.
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