|Frequently asked questions about Special Needs Trusts|
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Frequently asked questions about Special Needs Trusts:
SSI – or Supplemental Security Income – is a federal supplement program (administered by the Social Security Administration) for people with assets below $2000 and little or no income who are disabled and/or elderly. SSI helps pay for basic needs, such as food, clothing and shelter.
A person with special needs can have either a first-party trust or a third-party trust.
No. If you set up a trust for your child (a third-party trust), your child cannot direct how the money is spent. Your chosen trustee oversees management of the trust. If your child had access, he or she would be disqualified from do to the receiving public benefits due to the assets limits.
A payback trust is another name for a first-party trust, in which funding usually comes from a personal injury settlement or inheritance. Payback refers to paying back the state from money leftover in the trust upon the death of the trust beneficiary, as a reimbursement for having received public benefits. If the special needs trust was created with money from a parent or grandparent, for example (i.e., a third-party trust), there is no payback requirement.
A trustee is responsible for managing, investing and distributing trust funds. Whoever you choose must always be mindful of the beneficiary’s special needs and best interests, reliably acting as a genuine advocate. Furthermore, the trustee should not only be someone who is skilled at managing finances and making wise investments, but also keeping proper records and making permissible distributions with trust funds. Improper distributions may reduce or terminate public benefits.
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