When you hear about a special needs trust in San Diego, what comes to your mind? Do you think it is a program for the less privileged? Well, let’s see just what it means.
Special needs trusts are organized for people who have special needs. The aim is to supplement or support the benefits such a person might get from the government. If the trust is well organized, someone who is enjoying the funds from the trust will also be opportune to receive other government benefits. Generally, special needs trusts are divided into three main types. But you should know how it works before you know the types.
To make this trust work, there are three parties who must come to play. They are the donor, the beneficiary and the trustee. The donor is the giver or supplier of funds into the program. A trustee has an agreement with the donor to hold the fund. The beneficiary is the last in the chain and is the one who receives the fund as benefits. Most times, the wishes of the donor are stated out clearly in a document, but this is not a requirement. If there is a document, it will explain specifically what the trustee should do with the donor’s fund. And it is important for the trustee to use such asset accordingly.
For a long time now, special needs trusts have been applied to estate planning. The trust is also used to ensure the donor’s fund is used as he or she deems appropriate.
There are many reasons why the special needs trust is so popular. And if you wonder why there is so much noise about getting a special needs trust in San Diego, the main reason the program is so popular is that such a trust lives on after the death of the donor. It is a low-cost method of managing the donor’s money after his or her demise.
Elaborately, this trust is designed to help a person with special needs in terms of managing such a person’s assets without tampering with the benefits such a person is enjoying from the government of his or her country. And generally, it is divided into three types.
- First-party trust
- Third-party trust
- The pooled trust
In all of the types, the beneficiary is still and always the beneficiary.
- A first-party trust will hold an asset that belongs to the beneficiary with special needs. This might include an accident settlement or inheritance.
- A third party trust will hold the beneficiary’s funds, including funds which belong to another person who aims to assist the beneficiary.
- A pooled trust will hold the funds of more than one beneficiary.
You might wonder why the types of trust are split into three. The main factor that determines the creation of the types is because of the rules and regulations under the supplemental security income (SSI). The government created SSI to help people who are earning low income and who have special needs on the side.
There are requirements you must meet to qualify for SSI. First, the beneficiary or the applicant can only possess $2,000 under his name. Perhaps the person has above that. Maybe because he or she inherits or because she saves a lot and there is an excess or because she receives a settlement from an accident, the government will allow him in, but his or her asset will be placed under the first-party trust. When this applicant or beneficiary is still alive, the benefits of the trust are for him to enjoy. When such a person dies, his asset is used as reimbursement to pay the government for the cost of his or her medical care.
All these types of trusts are essential and good for people who are enjoying the benefits of SSI and when they come into a lot of wealth suddenly. The trusts allow their beneficiaries to enjoy their wealth while still enjoying the benefits of the trusts.
While looking for a special needs trust San Diego, you should try to understand all the types and hold onto this basic understanding. The third-party trust is common among family members and parents to assist children with their special needs. The trusts might hold any of the property or assets that belongs to other individual or family member. This might include bonds and stocks, houses, and even other types of investments. Just like the first-party trust, the third-party trust will also ensure that a beneficiary keeps enjoying the benefits of SSI while enjoying the third-party trust’s benefits. Also, the benefits of third-party trust can be used for paying the beneficiary’s additional needs beyond what is covered under the government’s benefits.