If you are the parent of a child with special needs, understanding what steps you can take to ensure their financial security in the future is vital. Unfortunately, many are unaware of the estate planning tools that can help ensure their loved ones are protected. By creating a special needs trust (SNT), you can provide your loved one with the support they need while ensuring they still qualify for needs-based government assistance programs. Please continue reading to learn whether an SNT is revocable and why connecting with a trusted Montgomery County Trust Attorney is in your best interest.
What is a Special Needs Trust?
A special needs or supplemental needs trust (SNT) is a legal arrangement that provides support and care for beneficiaries with disabilities. It is designed to protect the assets of the SNT beneficiary while ensuring their eligibility for needs-based government benefits such as Supplemental Security Income (SSI) and Medicaid is preserved. It’s important to understand that because the SNT beneficiary does not own the assets in the trust, they can remain eligible for benefit programs with an income limit.
However, if you were to leave your loved one assets in a will could disqualify them from receiving certain government benefits. By creating an SNT, you can ensure they are financially supported in the future without jeopardizing their eligibility for necessary programs.
Are These Trusts Revocable?
A common concern when establishing an SNT is whether it’s revocable or irrevocable. It’s important to note the differences between first-party and third-party trusts. A first-party trust is funded with assets that belong to the beneficiary, such as a settlement or inheritance. It is established and managed by a trustee. The funds held in this trust are used to pay for the beneficiary’s care and support. A third-party trust is established and funded by someone other than the beneficiary. Parents or grandparents often establish this type of trust for the benefit of their disabled child or grandchild. A third-party trust is also managed by a trustee responsible for using the funds for the beneficiary’s care and support.
Generally, a first-party SNT is irrevocable. This means it cannot be altered or modified once created. A third-party trust, on the other hand, is usually recoverable. As the grantor, you can amend or revoke the trust at any time, and the trust will remain private until your death. Once you pass away, it becomes irrevocable.
Trusts are an essential part of the estate planning process. At JD Katz, we understand that protecting and providing for your family is crucial. As such, our skilled attorneys are prepared to help you draft the best possible SNT for your loved one to ensure their long-term welfare. Contact our firm today to learn more about how we can assist you.