What is a Special Needs Trust?
A special needs trust is a contract that sets aside assets for someone who has mental and physical disabilities. The contract is in the form of trust and it may be part of an existing Trust or it may be a standalone special needs trust. Special needs trust main purpose is to set aside funds for the continued care of a person that has disabilities. A special needs trust can also protect valuable government benefits that the beneficiary is already receiving. For Example, if a person inherits a 401K plan that has severe disabilities they may have to forfeit a portion or all of their government assistance until the 401K plan has been completely spent. However, if a Special Needs Trust has been set up the 401K is transferred to the Trust and the valuable Government benefits continue to support the person with special needs. There are requirements that must be met for the SNT to qualify for Government Benefit Protection. Distributions need to be tailored to fit certain criteria.
A Special Needs Trust is also an invaluable tool to make sure that your Parent, Child or Friend has the care and resources that they will need if anything happens to you. Once established contributions can be made from friends and family so that you know that your special needs benefactor will always be taken care of in the future.
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