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What Is a First-Party Special Needs Trust?

Individuals living with disabilities in California often have additional daily needs that others don’t require. Many cannot live without external support. Parents with a disabled child must consider how to provide for their offspring once they have passed away. One way to do this is through a first-party special needs trust.

What is a first-party special needs trust?

Disabled people often rely on federal government assistants programs to help provide for their daily needs. Although these programs are essential, they have additional income limits, yet frequently don’t provide enough money for those with disabilities to live on. A first-party special needs trust allows you to incorporate special estate planning needs that won’t affect strict asset limit rules that affect eligibility. Funding for first-party special needs trusts (SNT) comes from the beneficiary’s assets that they already own or may own in the future. After assets are placed in the fund, they can only be used for the beneficiary’s benefit. The type of trust must be established before the beneficiary turns 65 and meet the government’s definition of disability. Mentally competent individuals can establish an SNT for their own benefit.

Establishing a first-person SNT

If you have just started to explore how to set up an estate plan to benefit a disabled child, you’ll discover that many different special needs trusts are available to benefit a disabled individual. Typically, people establish first-person SNTs after a disabled person inherits property or assets. Depending on needs, other trusts may also be appropriate.

Funds placed into SNTs can help pay for various expenses to make the disabled individual’s life easier. These can include costs for education, caregivers, assistive technologies, furniture and clothing, home modifications, dental and medical treatments not covered by insurance, and similar needs not paid for by government assistance.


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