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Special Needs Trusts
Many well-intentioned parents don't realize that an inheritance may cause many problems for their child. Under current federal law, any inheritance of more than $2,000 disqualifies disabled individuals from most federal needs-based assistance. Benefits from state public assistance programs may also be affected. A special needs trust, however, offers a
means of protecting your child's eligibility for these benefits, while
addressing the ongoing care and needs of your child. Assets are owned by the trust. The trustee is
usually given the power to manage those assets (e.g., to sell assets, to invest
trust funds). In addition, in the case of a special needs trust, the trustee
has the discretion to use trust assets for the benefit of the special needs
child. Trusts are governed by state laws and should only be drafted by an
attorney who is familiar with this area of law. In addition to legal fees,
there may be costs associated with transferring assets to, and administration
of, a trust. |
A special needs trust holds title to property for the benefit of a child or adult who has a disability. The special needs trust can be used to provide for the needs of a disabled person and to supplement benefits received from various governmental assistance programs. Special needs trusts typically provide for:
Special needs trusts also may allow a trustee to give the beneficiary money for:
A trust can hold cash, stocks, personal property and real property. It can own and/or be the beneficiary of life insurance. Special needs trusts also can be used to protect personal injury settlements or judgments from jeopardizing government benefit eligibility. Most importantly, special needs trusts can help parents coordinate their estate plans and provide peace of mind that their child will be provided for. |
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