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What does a 'special needs' trust do?

Years ago, trusts were generally considered something only very wealthy people had any use for. Over the past couple decades, however, it has become more widely understood that the trust structure can be utilized in a variety of ways that can benefit people of various levels of economic status. Some trusts, like a special needs trust, can be used for a very specific purpose.

Trusts are, of course, a legal structure that allows one person, termed the trustee, to hold certain assets, be it real or tangible property or some other financial instrument, in trust for the benefit of a different person, known as the beneficiary. Various stipulations can be put on the assets in the trust that affect how the funds can be distributed by the trustee or used by the beneficiary. A special needs trust is a trust that is extant for the purpose of benefiting a person who has some sort disability, be it physical or psychological.

The main benefit of a special needs trust is that it allows the trustee to use the funds for the beneficiary in such a way that the beneficiary can maintain his or her eligibility for government programs or benefits. For example, let's say that you had a disabled child whose disability was permanent and will prevent him from working. In such a case, your child may qualify for Supplemental Security Income. However, because eligibility for SSI is predicated upon indigence, bequeathing a large sum of money to him in your will may well cut off those benefits. However, if you set up a special needs trust for him, the trustee could use the funds to take care of certain living expenses and medical bills without negating his SSI eligibility.

If you have a specific question about trusts in general, or a special needs trust, you may consider consulting a Florida legal professional. There is some specific language that is generally needed in a special needs trust, particularly that the trust is supposed to be for extra, supplemental care of the beneficiary, above and beyond any public assistance he or she may receive. Further, the trust should clarify that it is not intended to be a basic support trust. There are also provisions of law and sections of the social security operations manual that should be noted in the trust instrument.

Source: estate.findlaw.com, "Special Needs Trusts FAQ's ," accessed on Aug. 25, 2014

Source: estate.findlaw.com, "Special Needs Trusts FAQ's ," accessed on Aug. 25, 2014

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