What is a Special Needs Trust?
A trust is similar to a will in that it plays a role in designating where your assets go after you die. But unlike a will, using a trust can help you avoid the State’s probate process. In preparing a trust, you can choose a trustee to help distribute assets privately or to help manage your assets if your beneficiaries are minors, for instance.
A special needs trust (SNT), or supplemental needs trust, is a specific type of trust that is designed especially for beneficiaries with a disability. These can include family members with medical conditions that render them unable to care for and financially support themselves, as well as an adult child. As a parent or caretaker of an individual with a disability, an SNT can give you the ability to designate assets and funds to be distributed to your loved one after you’re gone, giving you peace of mind they’ll always be safe and secure.
An SNT is a type of irrevocable trust. On the positive side, this means the funds may be protected from lawsuits and creditors later on, but it also means it is not amendable or able to be revoked without extensive proof of special circumstances or a court order.
Why Do You Need a Special Needs Trust?
You may be asking, “Why do I need an SNT?” or “How is leaving behind assets in an SNT any more beneficial to my loved one with disabilities than a standard trust?”
The answer lies in your family members’ eligibility for government benefits. Many individuals with disabilities receive Supplemental Security Income (SSI) or take part in programs like Medicaid. For many of these government health care and supplement income programs, even a small amount of money from another source can cancel out eligibility.
The main benefit of Indiana Special NeedsTtrusts is that they allow you to pass your financial legacy to your disabled loved one, while also preserving their access to government benefits.
The advantages of an SNT are profound and simple to understand, however, the process of developing such a trust is highly complex. A skilled special needs trust attorney from Webster & Garino can help you navigate this process so you can protect your loved one on all fronts.
Types of Special Needs Trusts
Parents or caretakers of a person with disabilities often feel immense anxiety because they’re worried about a future in which their loved one is on his or her own. You can take back your peace of mind when you create a special needs trust.
The first step involves choosing the right type of SNT for your unique situation. In Indiana, residents can choose from two distinct SNTs:
- Third-Party Special Needs Trust: A third-party SNT is set up by a person who is not the individual with special needs. Also called a grantor or settlor, this person is typically a parent, grandparent, sibling, or related caretaker of the disabled individual. Assets in this trust can come from a variety of sources including monetary gifts, proceeds from life insurance, and inheritance redirected into the trust.
- First-Party Special Needs Trust: A first-party SNT is a trust that you set up for yourself as a disabled individual. Since December 2016, the federal Special Needs Trust Fairness Act has made it legal for individuals with disabilities who are declared mentally competent to create and benefit from a first-party SNT. These trusts are commonly used by disabled individuals who receive an inheritance or previously healthy people who are disabled later in life via accident or unexpected illness.
There are many nuances involved in developing and maintaining each type of SNT and clients can benefit from the expertise of an experienced estate planning lawyer in Westfield, Indiana, such as our team at Webster & Garino LLC. Call us today to get answers to all your questions about special needs trusts in Indiana.