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Special Needs Trusts
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Special Needs Trusts Attorneys in Virginia

Estate planning for people with disabilities can be challenging and even scary. You want to be certain that your disabled child, family member, or other loved one is still provided for when you’re gone. However, without proper special needs planning, bestowing an inheritance on a disabled beneficiary can actually cause them to lose access to their state and federal government benefits.

A special needs trust protects a disabled individual’s quality of life while still protecting their continued access to Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), Medicaid, and other public benefits from government programs. Our Hampton Roads special needs trust attorneys are ready to help with legal advice in establishing and funding a trust. Contact the Montagna Law law firm to find out how we can help.

Call (877) 622-8100 or complete the online contact form to request a free consultation.

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What Is a Special Needs Trust?

A special needs trust is a trust that holds money for a beneficiary with disabilities. This beneficiary, who can be a child, grandparent, or any other disabled person you choose to name as a beneficiary, is still qualified to receive federal and state benefits such as SSDI, SSI, and Medicaid. The trust, when set up properly, supplements their existing quality of life by helping to pay for things that are not covered by other forms of government assistance.

Laws allowing for special needs trusts were established in 1993 when the government decided that disabled individuals should have the same estate planning benefits as people without disabilities. At this time, special needs trusts were established.

How Does a Special Needs Trust Work in Virginia?

Special needs trusts allow for a trustee or primary representative of the trust to grant funds to the disabled beneficiary to cover things as diverse as housing, transportation, entertainment, companions, dental or medical benefits not covered by Medicare or Medicaid, costs for babysitters, and luxuries like vacations. In some cases, trusts can be used for the purchase of vehicles or even real estate. The funds granted by the trust are called disbursements.

Because the beneficiary does not own the trust assets, they are not considered in the beneficiary’s eligibility for public and government benefits. The trustee uses the trust assets to supplement the government benefits of the disabled person rather than replacing them.

Trusts can be used to set up recurring payments, to pay vendors or service providers directly, or to reimburse you for funds already paid. Funds can even be disbursed via reloadable cards, much like debit or credit cards.

Two Types of Special Needs Trusts in Virginia

The two main types of special needs trusts in Virginia are first-party trusts and third-party trusts. The key difference between the two is who owned the assets that funded the trust at the time it was set up. Your estate planning attorneys can help you determine which kind of trust is best for your family.

First-Party Special Needs Trust

A first-party trust is funded with income or assets that originally belonged to the disabled individual who is also the beneficiary of the trust. When the assets are placed into the trust, those assets are owned by the trust rather than by a person, which is why they do not interfere with government benefits. First-party SNTs (special needs trusts) are also called self-settled trusts.

For these trusts to not interfere with Medicaid or Social Security, the law requires that the beneficiary be under the age of 65 at the time you create the trust, and the trust must be irrevocable. The trusts agreement must also provide for reimbursing Medicaid when the beneficiary dies or the trust is terminated. These funds usually come from a direct inheritance to the beneficiary or personal injury settlement funds.

Pooled vs. Non-Pooled First-Party SNTs

The two types of first party SNTs are pooled trusts and non-pooled trusts. Pooled trusts generally hold back a portion of the trust to fund other pooled trusts. Non-pooled trusts allow 100% of the beneficiary’s assets to pass on to those chosen by the creator of the trust.

Pooled trusts are also managed by a third party who is not a parent, legal guardian, or someone who has a personal relationship with the beneficiary. A nonprofit entity maintains control of all investments and disbursements; once money is surrendered to a pooled trust, you lose control over how it is spent and invested. Pooled trusts offer the benefits of a special needs trust but do not require administering and setting up separate trusts. They do, however, cost you some level of control.

Pooled trusts are an option for those with a small amount of funding for a trust, or when you do not have someone willing to serve as a trustee. It is always best, however, to consult with a qualified special needs trust attorney like Montagna Law to determine which type of trust is best for you and your loved one.

Third-Party Special Needs Trust

A third-party SNT is funded with assets that belong to someone other than the beneficiary when they are placed into the trust. For example, if you are creating a trust as part of your estate plan that will be funded by your money to benefit a child with a disability, you are creating a third-party SNT.

Third party SNTs are also called supplemental needs trusts. These trusts can provide amenities that the disabled individual would not otherwise receive from public benefits. These include things like powered wheelchairs, prosthetics, computers, and various creature comforts. For these trusts to be viable, no funds in the trust may have come from the beneficiary. Often, such trusts are funded by a parental or grandparental inheritance, gifts, and life insurance benefits.

What is important about a third-party SNT is that it does not provide for Medicaid to be reimbursed when the trust is terminated. The person who creates the trust determines how the funds and property of the trust are distributed when the beneficiary dies.

How Do I Set Up a Special Needs Trust?

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The steps to set up a special needs trust depend on the type of trust you want to create — first-party or third-party — and the way the trust will be funded. All trusts require a trust agreement, which is an estate planning document allowing you to transfer your assets into a trust. The attorneys at Montagna Law can help you navigate disability law and establish a trust and trustee for the beneficiary.

Do I Need Estate Planning Attorneys in Virginia?

A law firm with practice areas in trusts, wills, and estate planning knows the details and complexities of setting up trusts in Virginia and can guide you through all of the options and paperwork. They know, for example, how to establish successor trustees to take over the management of living trust properties when an original trustee dies or becomes incapacitated.

The right attorney can help you avoid critical mistakes that can be costly, and can help you in making sure that your disabled loved one’s government benefits remain intact. In short, the right estate planning attorneys provide peace of mind knowing that you have protected someone very dear to your heart.

Secure Your Loved One’s Future Today

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We are an affordable option for those in the Hampton Roads area, helping our clients establish the trusts they need to protect the interests of their special needs dependents. We deeply value the trusted attorney-client relationships we build and aim to make estate planning as straightforward as possible. If you need legal advice or help establishing a special needs trust for your beneficiary, contact Montagna Law at 757-622-8100 or use our online contact form for more information.