Do you have a grandchild with a disability? Are you planning to leave enough funds for your disabled grandchild so that he or she will be protected during his or her lifetime? Be aware, though, that you could possibly jeopardize his or her continued receipt of important government benefits. Is there anything you can do? Absolutely! By planning with your Florida qualified estate planning attorney, you can create a third party special needs trust. This trust will allow you to provide support for your disabled grandchild and, when properly established, will not risk the loss of government benefits he or she may be receiving.
How is a third party special needs trust funded? It is funded by someone other than the trust beneficiary, whereas in a first party special needs trust it is funded by the special needs trust beneficiary. It is critical to properly set up and fund the third party special needs trust so that you can be sure that the trust meets your objective of providing for your disabled grandchild without placing the receipt of government benefits, such as SSI or Medicaid, at risk of loss.
How do you establish a third party special needs trust? You begin by creating a trust document and then setting forth the terms of the trust. At this point, you will need to appoint a trustee who will be authorized with managing the trust on behalf of the beneficiary, your disabled grandchild. Next, and very important, you need to properly fund the trust. You will need to choose which assets you will use to fund the trust, assets may include anything from real estate, to stocks, to cash. Know that the property must be retitled so that the trust is now the owner of the property, not the person funding the trust. In addition, do not forget to contact the IRS to get a tax identification number for the trust.
Now that the third party special needs trust is funded, the trustee may use the funds held in the trust for the benefit of the beneficiary, your disabled grandchild. Here is a word of caution in regard to distributions from the third party special needs trust. Distributions from the trust must be carefully made because if there is an improper distribution, such as those made directly to the special needs beneficiary, it could count against your disabled grandchild when calculating his or her eligibility for government benefits.
Planning for a disabled grandchild is so important. We are qualified and have many years of experience with estate planning. We know this article may raise more questions that it answers. We do telephone, computer, and face-to-face appointments. Our face-to-face appointments are held outside in the open air (frequently selected by clients for document signing) and inside our office conference room. We follow all CDC guidelines. Our office procedures adhere to COVID-19 safety protocols and are designed and enhanced by medical review and air quality engineering.