Estate planning by parents who have children with special needs is tricky, to say the least. The most pronounced concern is how to protect the public benefits that the special needs person is receiving. A wrong step here could cause this individual to lose or delay public benefits.
The best and main method to protect the special needs person is through the establishment of a trust. There are a number of kinds of trust to consider.
First, there is a “self-settled trust.” This trust is one that is created by the special needs person with his or her own money or assets. It is sometimes called a “first-party special needs trust.”
The second type of trust is “third-party trust.” This trust is created by someone other than the special needs person and money or other assets placed in this trust are not owned by the special needs person.
A special needs trust, also known as a supplemental needs trust or SNT, is a trust that holds money or other assets for a special needs person. In turn, what is held in the trust is used to “supplement” the needs of the special needs person. These items must supplement, not enhance or replace the public benefit. This is why it is sometimes referred to as a “Supplementary Needs” trust.
If the trust violates its purpose, the special needs person may lose the public benefits.
There are several types of Special Needs trusts: 1) The First Party Special Needs Trust (the disability trust), 2) the Pooled Trust and 3) the Third Party Special Needs Trust. Certainly, there is a mountain of information regarding these trusts.
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