There are many different types of special needs trusts that you can set up for a loved one with disabilities in Indiana. Here’s a look at the three most common types of trust, including their benefits and drawbacks, so that you can decide which is best for you or your loved one.
Options for special needs trusts
Self-settled trusts are the most popular type of special needs trust. The person with disabilities sets them up, and the funds in the trust are used to pay for their care. People prefer it because the person with disabilities retains control over their own finances and can make decisions about how the money is spent. However, the drawback of a self-settled trust is that it can be difficult to qualify for Medicaid coverage if you do not spend the funds in the trust on eligible expenses.
Pooled trusts are managed by a nonprofit organization, and the funds in the trust are pooled together to pay for the care of all the beneficiaries. This trust is easy to qualify for since there is no income or asset limit. In addition, you can use it to pay for any type of care, including housing, medical expenses and therapy. The drawback of a pooled trust is that the funds may not be available immediately when they are needed.
Third-party trusts are set up by someone other than the person with disabilities. The trust can be used to pay for any type of care, including housing, medical expenses and therapy. Like with a pooled trust, the drawback of a third-party trust is that the funds may not be available immediately when they are needed.
Each type of special needs trust has its benefits and disadvantages, so it is important to carefully consider which type is best for your loved one. If you have a child with a disability, you should consider special needs trusts in your estate plan.