Special Needs Trust
Programs offered through the Federal Government and the State of North Carolina provide benefits for individuals with special needs, however, to receive these benefits, individuals must demonstrate that they have virtually no income or assets of their own. But what if that person receives an inheritance or a settlement through a lawsuit? What if family members would like to provide a little extra to supplement the bare minimum provided through government benefits?
A Special Needs Trust provides a way for an individual to receive some payments without losing their eligibility for critical benefit programs. Brady Cobin Law Group, PLLC crafts First-Party and Third-Party Special Needs Trusts to conserve the assets of special needs individuals while preserving their ability to receive valuable benefits. Special Needs Trusts allow an individual to have some independence while providing for care and future needs to be met.
Differences Between First and Third-Party Special Needs Trusts
As the name implies, the initial difference between a First-Party and Third-Party Special Needs Trust is the identity of the person contributing property into the trust. The funds in a First-Party Special Needs Trust are provided by assets the person with special needs has received. Often these funds come from an inheritance or the proceeds of a lawsuit.
In a third-party Special Needs Trust, someone else provides funding for the trust. Parents or other relatives often fund Supplemental Needs Trusts for a family member they care for.
Trusts are set up to be either revocable, meaning that the person who set up the trust can change or revoke it, or irrevocable, so that the person who donated property into the trust cannot get it back or change the terms of the trust. First-Party Special Needs Trusts must be irrevocable in order for the beneficiary to be eligible for public benefits. When the beneficiary passes away, NC Medicaid will have a claim for repayment of any benefits paid to the beneficiary if there are funds remaining in the trust. In a Third-Party Special Needs Trust, by contrast, remaining funds can be distributed in accordance with the grantor’s wishes, and the government has no claim on the money.
A trust is a legal entity that is created to hold property. Estate planning attorneys use a wide variety of different types of trusts to accomplish different goals.
In a trust situation, the control and benefits of property ownership are generally split up. The beneficiary receives proceeds from the trust, but they don’t have control over how the property is managed or invested. Instead, the trustee makes all the management decisions and handles distribution of assets to the beneficiary. The trustee owes a duty to make all decisions in the beneficiary’s best interests.
Because it is the trust, rather than the beneficiary, that owns the property, it is not counted against the beneficiary as property and doesn’t interfere with eligibility for government benefits. Property in the trust can also be protected from creditors.
Find Out How a Special Needs Trust Could Provide the Protection You Need
Whether you want to establish a trust to provide for a loved one or to protect your own assets, the experienced team at Brady Cobin Law Group, PLLC is ready to help. We understand how to work with the legal requirements for Special Needs Trusts to create an arrangement that provides the maximum benefits in line with your goals. We invite you to schedule a consultation to learn more about how we could protect your family’s interests with a Special Needs Trust.