Two forms of special needs trusts
The special needs trust is a great tool for people in South Carolina who are concerned about the future financial health of their children or other relatives. It is a way to provide them with funds without interfering with their benefits.
Special Needs Trusts Types
For someone with special needs, day to day cost of living expenses can be very high, and government benefits often do not cover all of the medical and other costs, so they need other resources in order to maintain themselves over their lifetime. That is what the special needs trust is designed to help solve. Medicaid and Social Security Disability can help, but they can’t cover everything, and they have limits on how much in assets a beneficiary can own.
By placing money in a special needs trust instead of just a bank account or other instrument, it is sheltered from SSDI and Medicaid asset rules, but the beneficiary can still use it. There are two main types of special needs trusts. In a third-party trust, there is an external person who is the trustee and who manages the funds. Other people can donate and contribute, and the trust is never in the name of the person who is the beneficiary. The assets come from an inheritance or insurance policy and pass from the parents to the trust. On the other hand, the first-party trust is set up in the name of the beneficiary with assets they own, including assets they inherited.
Both trusts are useful tools to help a person with special needs pay for their expenses without jeopardizing their access to Medicaid and Social Security.