From Kiplinger · · 1m 10s
Special Needs Trust Benefits
Special needs trusts protect disabled loved ones' finances without losing government benefits.
In brief
Special needs trusts protect disabled loved ones' finances without losing government benefits. Special needs trusts hold assets for disabled beneficiaries while preserving eligibility for Medicaid and Social Security. Originally reported by Kiplinger.
What is a special needs trust
A special needs trust holds assets for a beneficiary with disabilities without affecting their eligibility for government benefits like Medicaid and Social Security.
Types of special needs trusts
Third-party trusts are funded by someone other than the beneficiary, while first-party trusts use the disabled person's assets.
Third-party trust benefits
Third-party trusts allow more agency in distributing assets after the beneficiary dies, such as to siblings or charities.
First-party trust limitations
First-party trusts require Medicaid to reimburse services before any remaining funds can be used for the beneficiary.
Trust revocability options
Third-party trusts can be revocable or irrevocable, with families often choosing irrevocable trusts for stronger long-term protection.
Funding trust assets
Assets like cash, real estate, and investments can be placed in a trust, with life insurance policies often naming the trust as beneficiary.
Trustee responsibilities
Trustees manage assets for the beneficiary's benefit, with corporate trustees recommended for impartiality and tax management.
What to remember
Special needs trusts hold assets for disabled beneficiaries while preserving eligibility for Medicaid and Social Security.
