A third party special needs trust is an important tool in long-term planning for a child with special needs. A special needs trust can help parents plan and maintain the child’s financial stability while ensuring his or her long-term eligibility for government assistance like Social Security and Medicaid.
There are important things to remember. Perhaps most importantly, a third party special needs trust itself must be the beneficiary of any money parents or another relative wants to give the child. The child cannot accumulate more than $2,000 in assets or risk losing important and life-sustaining public assistance benefits. For that reason, a special needs trust must to be set up carefully and by an experienced special needs planning attorney.
Regardless, once you set up the trust, it must be funded. There are different ways to put money in the trust, including:
- Life insurance, payable after the parents’ deaths.
- Savings and investments, including retirement accounts
- Parent’s state pension benefits after their death such as TRS or SURS (note trust must be drafted carefully to receive these monthly pension benefits)
- Gifts, assistance, and inheritances from friends and family members.
- Property, such as the family home or vacation house
Now, you and your special needs attorney must decide on which special needs trust is best for your child, or whether both are required. There are two that are most commonly implemented by special needs families in the state of Illinois.
A self-settled special needs trust is most commonly established when the child has received money directly through an inheritance or a personal injury lawsuit. A self-settled special needs trust must be established by the individual with special needs if they are legally competent, or the parent, grandparent, guardian or the courts. The beneficiary is the child only.
A third party special needs trust is usually established by the parents of a child with special needs who have assets that the child has no part of. A third party special needs trust is often used to hold an inheritance or a gift, yet still allow the child to qualify for government assistance. There are no limits to how much money the trust holds, so a parent can put money in through life insurance, investments or the property.
Rubin Law is the only law firm in Illinois exclusively limited to providing compassionate special needs legal and future planning to guide our fellow Illinois families of children and adults with intellectual disabilities, developmental disabilities, or mental illness down the road to peace of mind. For more information, email us at email@example.com or call 866-To-Rubin