If you are caring for a child with a disability, you may wonder how to provide long-term financial support without jeopardizing access to essential government benefits. A special needs trust can offer a way to protect their future while helping cover necessary expenses beyond what benefits like Medicaid or Supplemental Security Income provide.
Special needs trusts are structured to hold assets for the benefit of a person with disabilities without those assets being counted toward eligibility thresholds for public assistance. Whether the trust is used for housing, transportation, therapy or other needs, it offers peace of mind and financial security.
Understanding the different types of special needs trusts
There are several types of special needs trusts. Each one is structured around who funds the trust, how it operates and what happens to the remaining assets when the beneficiary passes away.
- Third-party special needs trust: This is created and funded by someone other than the beneficiary, typically a parent or grandparent. It can be set up during the creator’s lifetime or take effect after their death. Since the funds never belong to the beneficiary, there is no requirement to reimburse Medicaid when the beneficiary passes away.
- First-party special needs trust: This type of trust is funded using the beneficiary’s own assets, such as a legal settlement or inheritance. It must include a Medicaid payback provision, meaning any remaining funds are first used to reimburse the government for services provided before being distributed to others.
- Pooled special needs trust: This option is typically managed by a nonprofit organization. Multiple beneficiaries have separate accounts within a single larger trust. These accounts are pooled for investment purposes but managed individually. This may be a cost-effective solution for families who cannot establish a standalone trust.
Establishing a trust is a personal decision based on your child’s needs, assets and current or future reliance on government support. If you are ready to create a trust, contact the Quinn law firm. Call (814) 833-2222 to take the first step toward protecting your loved ones.
