Protecting Estates.
Protecting Legacies.

Taking a look at first-party special needs trusts

If you are thinking about creating an estate plan to help a disabled family member, or you have a disability and want to set up an estate plan for yourself, it is vital to understand various estate planning options and find the most advantageous strategy. Special needs trusts help many disabled people receive assets through an estate plan without losing eligibility for critical government assistance that they count on.

While you can set up third-party special needs trusts, it is important to understand how first-party special needs trusts work as well.

Different types of first-party special needs trusts

It is crucial to note that there are different classifications when it comes to first-party special needs trusts. According to the California Department of Health Care Services, a first-party special needs trust can be either a (d)(4)(A) or a pooled trust. While (d)(4)(A) trusts can only benefit disabled people under 65, pooled trusts can benefit disabled beneficiaries regardless of their age.

However, non-profit associations set up and manage pooled trusts. These trusts pool the assets of beneficiaries for investment reasons, but beneficiaries have their own accounts.

Funding first-party special needs trusts

First-party special needs trusts take funding from the assets owed to the beneficiary, such as settlements and awards, as well as assets belonging to the beneficiary of the trust. On the other hand, third-party special needs trusts involve funds from other parties.

If you want to set up a first-party special needs trust, it is important to weigh the benefits of different options, pinpoint the most sensible course of action and move forward carefully.

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