From Our “Ask a Question” Mailbag: Special Needs Trust Formation

Most Recently Updated August 9, 2018.

Special Needs Planning Attorney, Peter L. Klenk

“Can I form a Special Needs Trust during my lifetime?  I would like to put some money aside for my Special Needs son now.  But I don’t want to disqualify him from his Medicaid.”

Special Needs Trust Formation

You may indeed form a Special Needs Trust during your lifetime.  These trusts are called Inter Vivos Trusts, meaning “during life.”  Most people can only afford to set up a Special Needs Trust in their Will.  They use their estate to fund the trust at death.  If you have the resources to form an Inter Vivos Special Needs Trust during your lifetime, it means that you are comfortable no longer owning these assets during your life. Once you have funded this Trust, the assets are no longer yours.

Third Party Special Needs Trusts.

A Special Needs Trust you form during your lifetime is called a Third Party Special Needs Trust.  A Third Party Trust differs from a First Party Special Needs Trusts, created for or by the Special Needs Person using his assets.

The Special Needs Trust must have some specific terms. Beyond these terms, you have flexibility.  You can select the trustee.  The trustee can be a family member or a professional.  You can also name a Protector.  The Protector has the power to remove and replace the trustee without involving the court.  Serving as a Protector rather than trustee allows a family member to watch over your son without being personally responsible for the trust assets.

I suggest that we speak about your particular situation.  The Trust’s terms can be crafted to address specific assets and your son’s particular situation.  For example, you have flexibility in deciding what happens to the remaining Trust assets at your child’s death.

The Special Needs Trust Must Contain Certain Terms but Can Be Flexible Others.

I suggest that we speak about your particular situation to craft a Third Party Special Needs Trust that addresses both your son’s and your needs.

More Planning Questions?

Special Needs Trust Formation is only a piece of the Estate Planning process. By all means, if you want to learn more, please read my more detailed article, Estate Planning Everything You Need to Know.

In Conclusion: Special Needs Trust Formation

I hope that this article was helpful in explaining Special Needs Trust Formation. Further, I included links to even more detailed information on my website so you can learn more. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!

Let our Estate Planning lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced estate planning lawyers.  By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!

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