Should I Create a First-Party or Third-Party Special Needs Trust?
When you are considering setting up a special needs trust (SNT) in Connecticut, it is important to work closely with an experienced Canton trusts attorney who can assist you with all aspects of this process. Trusts can be extremely complicated, and they have many requirements to which it is necessary to adhere if you are the party establishing the trust (the “settlor”) or benefiting from it (the “beneficiary”). The ways in which a special needs trust gets established, and functions, can be particularly confusing if you do not have any background knowledge about this particular kind of trust.
In researching special needs trusts in Connecticut, you will likely come across information about both first-party or self-settled special needs trusts, as well as third-party special needs trusts, and you are likely wondering which you should be considering. Our Connecticut estate planning lawyers can provide you with more information.
Determine if a Special Needs Trust is the Right Type of Trust
Before you begin looking into whether you should establish a self-settled or a third-party special needs trust, it is important to determine first whether a special needs trust is indeed the proper type of trust for you based on your situation.
Special needs trusts are designed for disabled adults who rely on public benefits such as Medicaid and Supplemental Security Income (SSI) payments. With a SNT, a disabled adult can maintain their eligibility for these types of public benefits — which are premised on the disabled person having limited assets — while still having access to funds held in the special needs trust. This type of trust can be established for a disabled loved one, or you can establish this type of trust for yourself with funds from a personal injury settlement or similar, for example.
Will You or Another Party Benefit from the Special Needs Trust?
If a special needs trust does seem like the right type of trust for you based on your needs or a disabled family member’s needs, then the next question to determine whether you want to establish a self-settled (i.e., first-party) or third-party SNT is who the trust is intended to benefit. Will the funds in the trust benefit you, or will they benefit a disabled family member?
For anyone who became disabled due to an accident or serious occupational disease, or due to a medical error or similar that resulted in a personal injury or accident settlement, that individual may want to create a self-settled SNT for themselves. By creating a self-settled SNT, you can remain eligible for public benefits while still benefiting from the funds you received in your settlement. Differently, for anyone who has a disabled family member (such as a disabled child or grandchild), you may want to create a third-party SNT to ensure that you provide that loved one with financial assistance without affecting their eligibility for public benefits.
Contact a Canton Special Needs Trust Attorney
Whether you need to create a self-settled or a third-party special needs trust, or you require assistance with a different type of trust or estate planning matter, an experienced Canton special needs trust lawyer at the Law Office of Brian S. Karpe can assist you. We help Connecticut residents with a wide range of estate planning matters, including special needs trusts, and we can speak with you today about your estate planning needs. Contact us for more information.
Source:
cga.ct.gov/2016/act/pa/2016PA-00176-R00SB-00392-PA.htm
