When a loved one requires ongoing care due to a physical and/ or cognitive disability, estate planning becomes essential. One of the most effective tools for this purpose is a Special Needs Trust. A Special Needs Trust is a powerful estate planning tool designed to provide long-term financial support without compromising eligibility for critical government benefits like Medicaid or SSI. However, establishing and funding a Special Needs Trust in Missouri involves navigating complex legal requirements and strict regulations. To ensure the trust is properly structured and truly benefits your child, it is essential to work with a knowledgeable estate planning attorney who understands special needs planning
Different Types of Special Needs Trust in Missouri Estate Planning
There are two main difference Special Needs Trust in Missouri- the first party trust and the third-party trust.
A first-party special needs trust is established by using the assets of the individual with a disability. This type of trust is commonly used when the individual has received a significant financial award, such as an inheritance, legal settlement, or has personal savings that could disqualify them from vital government programs like Medicaid or Supplemental Security Income (SSI). Government benefit programs like these have strict income and asset limits, and holding these funds in a personal account would usually exceed those limits. In most cases, SSI eligibility requires that the individual have no more than $2,000 assets on hand. By placing these funds into a first-party special needs trust, the beneficiary is able to remain eligible for public benefits, while using the trust to pay for expenses related to supporting their supplemental needs. However, one important feature of this type of trust under federal law states that when the beneficiary passes away, any remaining funds must be used to reimburse the state for Medicaid services provided during their lifetime. This is known as the Medicaid payback requirement.
A third-party special needs trust, on the other hand, is funded with assets that do not belong to the beneficiary. These funds typically come from family members, such as parents or grandparents, who want to ensure the long-term care and support of their disable loved one. This trust can include a variety of asset types, including cash, investments, or even property, and is designed to enhance the beneficiary’s quality of life without impacting their eligibility for government assistance. One of the primary advantages of a third-party special needs trust is that it is not subject to the Medicaid payback requirement.
What Type of Special Needs Trust is Right for You?
Both types of special needs trusts help safeguard access to public benefits, however, they differ primarily in terms of funding and what happens to remaining assets after the beneficiary’s death. Understanding these differences is crucial when planning for the future of a loved one with special needs. Given the legal complexities involved, it is crucial to work with an experienced estate planning attorney to ensure the trust is set up correctly and serves your child’s best interests. Reach out to Mark Harford Law for personalized assistance.
Contact Mark Harford Law to Help Establish a Special Needs Trust in Missouri
If you are the parent of a child with disabilities, then they will continue to need special care even if they outlive you. As such, it is especially important to plan your estate with their unique needs in mind. Ensuring that your child is protected and financially supported after your passing requires careful attention and working within the legal framework.
A Mark Harford Law, our dedicated estate planning and long-term care attorneys work with families across Missouri to craft customized plans that reflect their goals, such as preserving assets, protecting loved ones, and minimizing tax burdens. Let us help you build a secure future for your loved one. Contact us today to schedule a consultation and learn how a special needs trust can offer both peace of mind and lasting financial protection.