5 Steps to Establish a Third-Party Special Needs Trust

Boy with special needs in a wheelchair spends time in the park with an able-bodied young girl and a dog

Setting up a special needs trust for your loved one who has a disability is a great way to supplement their income while making sure he or she is able to continue receiving government benefits.

With American healthcare and the cost of living as expensive as it is, it is critical that your loved one is able to receive financial government assistance. Conversely, it is equally as important that individuals with special needs and their loved ones are able to plan for their financial futures so that they are not left with nothing later in life.

A third-party special needs trust is unique because it allows the individual with special needs to hold an account that is funded by friends or family, as opposed to receiving funding from the individual with special needs themselves.

Read on to learn the five steps you need to take to establish a third-party special needs trust.

Step #1: Decide how much money you’d like to place in the fund, considering how much care is required.

Before deciding how much money to place in the fund, consider the following:

  • What kind of care does your loved one need?
  • How old is your loved one?
  • How long should this fund last?
  • What is the current and likely future state of the special needs individual’s health and capability of caring for him or herself?
  • What level of future care is needed for both essential and comfortable living?

Once you’ve answered these questions honestly, you should have a better idea of how much money your loved one will need.

Step #2: Verify that none of the assets to be used for the fund ever belonged to the individual with special needs—whom the fund is for.

One of the eligibility requirements for a third-party special needs trust is that the funds in the account must never have belonged to the special needs individual for whom the trust is created.

Step #3: Determine where the money to be placed in the fund will come from.

As a friend or family member of an individual with special needs, you can contribute to a third-party special needs trust using the money you earn throughout your lifetime, or you may fund the trust using your estate plan.

Step #4: Think about where the money should go when the individual with special needs passes.

You’ll need to make decisions about where you’d like any money remaining in the account to go when your loved one passes away. You may choose for the remaining funds to be distributed to other family members, friends, charities, or other individuals and organizations.

Step #5: Work with an attorney to create an official third-party special needs trust for your loved one.

A skilled special needs trust attorney will be able to assist you with everything you need to establish an account for your loved one. An attorney will provide you with a trust document that you’ll need to sign. Once you sign the document, then the assets will be transferred to the special needs individual.

In addition, an experienced special needs trust professional will provide legal representation and write all of the necessary documents.

We’re Here to Help Individuals With Special Needs and Their Families

If you would like to establish a third-party special needs trust, or any other type of special needs trust for your loved one, our team is here to help. We are highly skilled in setting up trusts for individuals with special needs and we have helped many others in similar situations with their financial futures. Let our team see if we can help you and your family with your financial needs too.

Call Legacy Enhancement Trust today at (888) 988-5503 to learn how we may assist you!

Related Posts
  • Maximizing Your Trust Fund: Investment Strategies for Special Needs Families Read More
  • Planning for the Future: Creating a Special Needs Trust for Your Child Read More
  • Special Needs Trusts Demystified: Breaking Down Legal Requirements and Processes Read More