The 3 kinds of special needs trusts

| Feb 22, 2021 | Estate Planning |

Data from the Centers for Disease Control and Prevention, or CDC, shows that over a quarter of the U.S. adult population lives with some form of disability. Almost eleven percent experience difficulty with cognitive functions like decision making, and 6.8% struggle with performing errands required for independent living. In Georgia alone, 27.2% of people suffer from some impairment.

If you have special needs children, you may worry about their future after you pass. Special needs trusts are one method of ensuring their care after you are gone. There are three main kinds.

1. First-party special needs trusts

These hold assets like an inheritance or settlement that belong solely to the beneficiary. Your kids are able to hold on to their financial possessions without endangering any aid they receive from the government. However, after their death anything remaining passes on to said institution as reimbursement for their care.

2. Third-party special needs trusts

This type contains money provided by other individuals like yourself or other family members. You may put stocks, bonds, houses, investments and other property into it. These trusts generally cover your children’s supplementary needs. Any left-over funds after their decease may revert to charity or family members instead of the government.

3. Pooled special needs trusts

With these, many individuals may combine their resources into an account created by a non-profit organization for investment purposes. A separate one for each beneficiary still exists. Unused savings may go to the government as recompense as well as the charity. One option for those in the Peach State is the Arc Georgia Pooled Trust.

This form of fund helps you avoid consequences that may negatively impact your offspring. It provides for them without rendering them ineligible for vital benefits like SSI and Medicaid. It also bypasses probate.

 

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