Do you think saving money is wise for your future? Of course, you do—but you face some hurdles if you’re disabled and get need-based benefits.
You could lose benefits if you and/or your spouse hold over around $2000-$3000 in assets. You may even owe back pay. These limits exist for federal and state benefits alike.
The good news is this doesn’t mean disabled people can’t save at all. A special needs trust, also known as a supplemental needs trust or special need trust, lets a beneficiary save without losing benefits. Read on to learn who can establish one.
Trusts Set Up by Family and Guardians
Families and guardians who want to provide for disabled dependents often use third-party special needs trusts. They are donors to the beneficiary, but the money does not belong to the disabled person in a legal sense.
That is the biggest reason to use this kind of supplemental needs trust.
The reason that’s positive is that the donor keeps any leftovers once the beneficiary dies. The government can’t take Medicaid payments from the donor’s money.
Age is another reason for third-party trusts. Seniors can’t have first-party trusts but can have third-party trusts.
Self-Settled Special Needs Trusts
Disabled folks ruled competent benefit from self-settled special needs trusts. They let them save personal income and own the savings. These special needs trust rules started under the Obama administration.
Competence doesn’t mean they have to 100% know how to set up a special needs trust. Any applicant should hire a special needs lawyer to file.
Lawyers make sure everything goes well. If anything goes wrong, it doesn’t put the applicant in harm’s way. Lawyers also teach the special needs trust rules that apply.
Court-Arranged Special Needs Trusts
A disabled person who has nobody to set up a first-party special needs trust for them may receive a court-arranged trust. This is common for people who are wards of the state because they have no family, estranged relatives, or a family that cannot provide for them.
These people often live in-state group housing or mental hospitals. In other cases, the court creates a trust to manage damages awarded from a lawsuit.
Family can request a court-ordered special needs trust in some cases. Yet, the most unique part of a court-arranged supplemental needs trust is that when the beneficiary passes away, the state gets any extra money.
Nonprofit Special Needs Trusts
Some nonprofits for disabled people open special needs trusts. They’re called pooled trusts and are large accounts with smaller accounts within. The donors often help clients with budgeting and other perks.
Legal Information That Matters to You
This information on who can set up a special needs trust gives you the tools you need to speak to lawyers. Having this kind of background is a big help to understand what the law permits.
To pick up other illuminating legal information, look no further than this website. Click to read another fascinating article to discover facts about court cases and laws that matter to you.