Why create a trust?

If you have a loved one with a disability who receives public benefits like Social Security, Medical Assistance, who gains access to money that could disqualify you for your benefits, a personal injury settlement, or an inheritance.

What is a First Party Special Needs Trust?

Is a trust that is funded with assets belonging to a special needs beneficiary and is commonly utilized in situations where the beneficiary is set to receive a settlement or an unexpected inheritance. First party special needs trusts are required to have a Medicaid payback provision.

What is a 3rd Party Special Needs Trust?

It's funded by the beneficiary's family and/or friends, rather than the beneficiary themselves. It can be funded either during their lifetime and/or through an estate plan.

What is a Revocable Living Trust?

It's created when a Grantor (the person who creates the trust) transfers assets into a trust during their lifetime and when the trust can be changed or revoked by the Grantor at anytime during his or her lifetime. It lets the living grantor change instructions, remove assets, or terminate the trust. Irrevocable trusts cannot be changed; assets placed inside them cannot be removed by anyone for any reason. Revocable trusts allow beneficiaries to avoid probate court and guardianship or conservatorship proceedings.

Whats the difference between special needs trust and irrevocable trust?

Special needs trusts are generally set up as irrevocable trusts because the beneficiary with special needs likely cannot earn a living and thus needs that money for the rest of their life. It's set up so that the income from the trust won't affect SSI benefits. It's meant to be a supplement to SSI and insurance benefits. One key advantage of irrevocable trusts is that their assets are protected from lawsuits and creditors. Another is that funds from the special needs trust are transferred to the ABLE account to pay for food and housing so it doesn't affect SSI benefits but not directly. Click here for more detailed information.

What is an Irrevocable Trust?

The transfer of assets is permanent. So once the trust is created and assets are transferred, they generally can't be taken out again. The biggest downside to an irrevocable trust is the fact that you don't have any control over your assets.

How do trusts and taxes work?

Click here to get a better idea of taxes for each type of trust.

How do I Set Up a Special Needs Trust?

A family member needs to sign the trust document and then transfer the assets to the Trustee. The trust document is provided by an attorney who provides legal representation and writes all the necessary documents.

How does a trust affect SSI benefits?

https://www.ssa.gov/ssi/spotlights/spot-trusts.htm

How to I choose a trustee?

It can be an individual or a corporate fiduciary (bank or trust company) who should have knowledge of special needs trust responsibilities. You want to choose someone who cares for your loved one's welfare and will be able to fulfill the responsibilities.

***Some people have a hard time choosing a person to trust with this huge responsibility. Some don't have the family connections to ask. Many get overwhelmed around tax season. That's when a personal care management team can support the trustee to improve or maintain quality of life for loved one. Scroll down to see a list.

In the case of a financial settlement, a corporate fiduciary must be used if the person is a minor. A corporate trustee must follow the document. Read FAQ's about trustees written by McAndrews Law Offices, P.C.. PA UNIFORM TRUST ACT: NEW DUTIES AND OPPORTUNITIES FOR TRUSTEES.

If a family member has doubts, appointing a trust protector makes sure a trustee does their job and in extreme situations can fire or overrule an appointed trustee. Trustees can be sued. Trustees don't always tell resources important matters or speed up the money to improve quality of life.

What is the law for removal of a trustee? Click here for the link.

What is a Pool Party Trust?

It's a trust established and administered by a non-profit organization. For self-settled, or (d)(4)(C) pooled trusts, each sub-account is established by the person with a disability, a parent, grandparent, guardian, or a court, and the trust is funded with the assets of the person with a disability.

Pooled Special Needs Trustees

The ARC Community Trust of Pennsylvania (ARC of Delaware and the ARC of Chester County)

Service: This chapter of The Arc operate, or participate in the governance or control of, pooled special needs trusts.
Website

Articles

"The ABCs of Uses of Special Needs Trust Monies" written by Dennis C. McAndrews, Esquire gives a comprehensive list of what items the special needs trust can cover.