If you’re a resident of the Southern Indiana area who has a loved one with special needs, you might want to create a trust fund for them. It can benefit your loved one in a variety of ways. There are different types of special needs trust, so you need to know what they entail to decide which one is best.
Third-party special needs trust
A third-party special needs trust is the type of trust someone creates to benefit a member of their family who has special needs. It’s not a trust that is established by a parent to benefit their child, in other words. Instead, it might be established by your child’s grandparent or aunt instead. However, the trust can be created by someone else to benefit another family member that’s not their immediate family member, hence the term “third party.” The beneficiary of the trust doesn’t have control over the assets named.
Medicaid special needs trust
A Medicaid special needs trust is a trust that is set up for a person who is disabled or ill and would otherwise qualify for Medicaid. For instance, if your elderly mother has to go into a nursing home to receive the medical care she needs for a specific illness and has limited finances, she could be named as the beneficiary of a Medicaid trust. Likewise, this type of trust can be created for your child with special needs.
First-party special needs trust
A first-party special needs trust is one that is funded with the beneficiary’s own assets. This type of trust is often established for a person who has become disabled after suffering a serious personal injury such as a traumatic brain injury. The beneficiary must be younger than 65 when a first-party special needs trust is established. Only some things can be paid for by the funds in the trust. Expenses that the government doesn’t pay for can be paid for through the trust. Things like food or housing aren’t payable through the trust’s funds.
If you are considering creating a special needs trust for your child or another loved one, you should decide which type of trust would best fit their needs. Speaking with an experienced professional can help.