Trust Matters
- by: Richard Howard
- Financial Planning, Guardianship, Medicaid, Special Needs Trust, Trust Funds
A Third-Party Supplemental Needs Trust permits someone to plan and financially provide for an individual with disabilities without affecting the individual’s eligibility for government benefits. These trusts are created and funded by a third party (the Settlor), – someone other than the individual with disabilities. They are often created and funded by family and/or relatives, the individual’s spouse, a legal guardian, or a court, and can exist as part of their will (Testamentary Trust), or they can be created, funded, and funds can be disbursed while the Settlor is still alive (Inter-Vivos Trust).
These trusts are often incorrectly called a “Special Needs” Trust. In the realm of government benefits and supplemental needs trusts, the term Special Needs Trust refers specifically to a “Payback” Trust – please see our information regarding Payback Trusts.
It is very important to remember that a Third Party Supplemental Needs Trust cannot be self-funded. Once an individual is entitled to receive assets, a First-Party Supplemental Trust must be established – a Pooled Trust or Payback Trust – to accept the individual’s assets so their benefits will not be disrupted. The individual’s assets cannot be placed in a Third-Party Trust, but the Third-Party Trust assets can safely flow into the First-Party Trust.
About the author: Rich Howard has been the President of River Communities Fiduciary Services since its inception in 2016.
Our team has extensive experience in trust administration, social services, and government benefits. We can help you preserve and manage your assets and find human services and supports.
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