Special Needs Planning

A trust is really a relationship between three parties - a donor, who supplies the funds for the trust; a trustee, who agrees to hold and administer the funds according to the donor's wishes; and a beneficiary or beneficiaries who receive the benefit of the funds.  Often, but not always, the donor's wishes are spelled out in a document that gives the trustee instructions about how she should use the trust assets. Trusts have been used for estate planning for a long time, and are highly useful toois for ensuring that a donor's property is administered as he sees fit. One of the reasons trusts are so popular is that they usually survive the death of the donor, providing a low cost way to manage the donor's assets for others when the donor is gone.

Anyone can establish a special needs trust and, if the trust is property drafted to account for tax planning, in certain situations gifts into the trust could very weil reduce the size of the donor's taxable estate. As if these are not enough reasons to create a trust, elderly people who are attempting to qualify for long-term care coverage through Medicaid can transfer their assets into a property drafted third-party special needs trust for the sole benefit of a person with disabilities without incurring a transfer-of-assets penalty, allowing the elder to qualify for Medicaid and making sure that the person with disabilities is taken care of in the future.