Estate Planning With A Special Needs Trust
Families who have loved ones with physical or mental disabilities often have significant concerns when it comes to their well-being. When it comes to estate planning, parents or other loved ones can establish a special needs trust to ensure that they are financially taken care of, even if their other loved ones have passed away. At Fort, Holloway, & Rogers our experienced Franklin estate planning & probate lawyers are here to answer all your questions about special needs trusts and help you craft an estate plan that best fits your, and your family’s, needs. To learn more, call or contact us today to schedule a consultation.
What is a Special Needs Trust?
Also known as a supplemental needs trust, a special needs trust is a way to leave money and other financial assets to a loved one with physical or mental disabilities without jeopardizing their access to certain governmental benefits like Supplemental Security Income, Medicaid, government housing, and other benefits. This estate planning tool places assets into a trust for the benefit of the person with special needs instead of giving it to them outright. A trustee is appointed to manage the trust, who has a fiduciary duty to act in the beneficiary’s best interest and provide for their needs with the trust assets.
A special needs trust can be set up to provide or cover for all types of expenses that your loved one might encounter, and this type of trust can pay for the following that is not covered by their other government benefits:
- Unexpected medical bills,
- Maintenance of public benefits,
- Pay for monthly living expenses,
- Cover the costs of in-home care,
- Pay for education, training, or other activities, and more.
Types of Special Needs Trusts
There are three main types of special needs trusts that can be established in Tennessee. The first type is called a first-person trust, or a self-settled special needs trust. This type of trust is created with money that the loved one will soon receive, such as an inheritance. With a first-person trust, any money remaining when that person passes away is paid back to Medicaid and other governmental agencies that provided benefits to that person during their lifetime.
The second type of special needs trust is known as a third-party special needs trust. With this type of trust, money is contributed by others and can encompass all types of assets like life insurance policies, real estate, and financial investments. Any funds remaining in a third-party trust do not have to be paid back to the government and can be passed to another person or organization when the recipient of that trust passes away.
The third type of special needs trust is called a pooled special needs trust. This type of trust is managed by a nonprofit organization, and the assets of several individuals are pooled to create a larger principal for investment. Each beneficiary retains their own individual account, and the trustee of the individual account is named by the nonprofit organization.
Talk to Our Office
If you are interested in learning more about establishing a special needs trust for someone in your family in the Franklin County area, call or contact Fort, Holloway, & Rogers today to schedule a consultation.