Special Needs Planning

Special needs planning can be done using the assets of parties other than the special needs individual (third-party trusts) or using the assets of the special needs individual. (first-party trusts)

In an estate planning setting, the client may be concerned about providing an inheritance for a special needs individual, who might be unable to manage his or her affairs and/or may be receiving public benefits. A special needs trust, sometimes referred to as a supplemental needs trust, can be used to give an inheritance structure and also to preserve public benefits. These trusts are often referred to as third party special needs trusts as they are created by a third party for the benefit of another and can either be created as part of a revocable living trust or as an independent document. The person leaving the inheritance creates the trust and any assets that the disabled person receives from the estate are deposited into the trust and managed by an appointed trustee. This allows the person doing the estate planning to have control over how the assets are distributed to the disabled person and allows the disabled person to retain any benefits that they may be receiving.

In other situations, a special needs person will acquire a substantial sum of money, either through an inheritance, lawsuit or other settlement. If this person cannot manage his or her own affairs and/or needs to continue receiving benefits from the government, creation of a first party special needs trust may be an invaluable tool to efficiently manage these funds.