Main Menu McMahon Law Firm, Attorneys and Counselors at Law

Toll Free
800-391-9987

Local
315-849-9053

Free Initial Consultation
"Attorney Advertising"

The different types of special needs trusts

Some people in New York who are creating an estate plan and have relatives with special needs might wonder whether a special needs trust might be an appropriate way to provide for those individuals. A trust is an estate planning vehicle that generally involves three participants, which are the creator of the trust, the trustee and the beneficiary. A special needs trust may be used to reduce the value of the creator's estate for tax purposes or an estate's value in order for a person to be eligible for Medicaid.

If someone wants to leave assets to a person with special needs who receives benefits from the government, it may be necessary for him or her to place those assets in a special needs trust. The reason is that the person who receives government assistance is not permitted to have more than $2,000 in assets. With a trust, the assets belong to the trust itself and not the person, and the trust can directly pay for some of the individual's needs. In this situation, a third-party trust would be needed. If there are multiple beneficiaries with special needs associated with the trust, a pooled trust is the best course of action.

People with special needs who have assets such as an inheritance or a legal settlement are also permitted to place those assets in a trust without forfeiting access to benefits. This is known as a first-party trust.

Different trusts may function in a number of ways in an estate plan, although some may carry more restrictions than others. For example, a trust may be used to protect assets from creditors, which is usually done by placing assets in an irrevocable trust. This removes the assets from the creator's control. Another type of trust is a revocable trust, which allows the creator to change or cancel the trust. An attorney may be able to advise someone regarding the right trust solution.

No Comments

Leave a comment
Comment Information