Author: Tom Sannicandro

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Any money, a person with a disability receiving government benefits, receives, can be protected with a first-person trust!

Maximizing the Benefits of a First-Person Trust: A Comprehensive Guide 

A first-person trust, also known as a self-settled trust, is a powerful tool for managing your assets and ensuring your financial security. This type of trust is particularly beneficial for individuals with disabilities who need to maintain eligibility for public benefits like Medicaid and Supplemental Security Income (SSI). Here’s a detailed guide on how you can effectively use a first-person trust. 

A first-person trust is funded with the assets of the individual who will benefit from the trust. This is different from a third-party trust, which is funded by someone other than the beneficiary. The primary purpose of a first-person trust is to hold assets in a way that does not disqualify the beneficiary from receiving public benefits. 

To set up a first-person trust, you need to follow these steps: 

• Use SpecialNeedsTrustsOnline.com as a resource: Find out information about first person, trust, and even draft one now using our nonprofit website.

• Choose a Trustee: Select a reliable trustee to manage the trust assets. This could be a family member, a professional trustee, or a trust company. 

• Fund the Trust: Transfer your assets into the trust. This can include cash, real estate, investments, and other valuable property. 

Funding the trust is a critical step. Here’s how you can do it: 

• Real Estate: Transfer ownership of your property to the trust through a deed. 

• Bank Accounts: Open new accounts in the trust’s name or designate the trust as the beneficiary of existing accounts. 

• Investment Accounts: Transfer stocks, bonds, and other investments into the trust. 

One of the main advantages of a first-person trust is that it allows you to retain eligibility for public benefits. Here’s how it works: 

• Income and Resource Limits: Public benefits programs like Medicaid and SSI have strict income and resource limits. By placing your assets in a first-person trust, those assets are not counted towards these limits. 

• Supplemental Needs: The trust can be used to pay for supplemental needs that are not covered by public benefits, such as education, transportation, and medical expenses not covered by Medicaid. 

Effective management of the trust is crucial to ensure it serves its purpose. Here are some tips: 

• Regular Reviews: Periodically review the trust with your attorney and trustee to ensure it remains compliant with current laws and continues to meet your needs. 

• Record Keeping: Maintain detailed records of all transactions and distributions from the trust. This is important for both legal compliance and transparency. 

• Professional Guidance: Work with financial advisors and other professionals to manage the trust assets effectively. 

The trustee can make distributions from the trust to pay for the beneficiary’s supplemental needs. Here are some examples: 

• Medical Expenses: Costs not covered by Medicaid, such as dental care, vision care, and therapies. 

• Education: Tuition, books, and other educational expenses. 

• Recreation: Hobbies, vacations, and other recreational activities. 

• Transportation: Vehicle purchase and maintenance, public transportation costs. 

A key feature of a first-person trust is the payback provision. Upon the beneficiary’s death, any remaining assets in the trust must be used to reimburse the state for Medicaid benefits received by the beneficiary. This ensures that the trust does not unfairly benefit the beneficiary’s heirs at the expense of public funds. 

Here are some scenarios where a first-person trust can be particularly useful: 

• Inheritances: If you receive an inheritance, placing it in a first-person trust can prevent you from losing your public benefits. 

• Lawsuit Settlements: If you receive a settlement from a personal injury or medical malpractice lawsuit, a first-person trust can protect those funds while maintaining your eligibility for benefits. 

• Divorce Settlements: If you receive a lump-sum payment or alimony as part of a divorce settlement, these funds can be placed in a first-person trust. 

A first-person trust is a versatile and effective tool for managing your assets and ensuring your financial security while maintaining eligibility for public benefits. By understanding the basics, funding the trust properly, and managing it effectively, you can maximize the benefits of this powerful estate planning tool. Always consult with professionals to ensure your trust is set up and managed correctly. 

Feel free to reach out if you have any questions or need further assistance with your estate planning needs!  https://www.specialneedstrustsonline.com

1. How Can I Use a First-Party Special Needs Trust? 

2. New Special Needs Trust Rules 2024: What to Know and How to Prepare 

3. First Party Special Needs Trust 

4. How To Set Up A Trust 2024 

If you or a loved one lives with a disability, you may already know how a special needs trust can help maintain eligibility for certain public benefits. These unique trusts allow individuals with disabilities to set aside funds for their needs without losing access to vital programs like Medicaid and Supplemental Security Income (SSI). Recently, federal law regarding special needs trusts was updated with new statutes and regulations. These changes impact everything from age limits and trust contributions to required oversight and accountability. Anyone currently administering a special needs trust or looking to establish one will need to understand the latest rules to stay compliant. Let’s break down key updates regarding special needs trusts and provide tips to make the most of these important planning tools in 2024 and beyond.

Key Changes in the Latest Rules for Special Needs Trusts

Some of the most notable changes in federal law, under The Special Needs Trust Fairness Act of 2016, affect first-party special needs trusts in particular. First-party trusts are funded with assets belonging to the person with disabilities. Common sources include lawsuit settlements, inheritances, or work earnings. Some key things to note about the new rules include:

1. Self-Established Trusts: Individuals with special needs can now establish their own first-party special needs trust without the need for a third party or going through the courts. This is a major change that enables more independence.
2. Age and Funding Requirements: Trusts established by the person with special needs have the same benefits as those set up by parents, grandparents, guardians, etc. To qualify, the trust must be funded with assets of the disabled individual under age 65 and contain payback provisions upon death.
3. Increased Independence: A major goal of this law change is to increase the independence and empowerment of people with special needs by making it easier and more affordable to establish these trusts.

The latest rule changes have made it easier for individuals to establish their own first-party special needs trusts. However, proper guidelines must still be followed to ensure eligibility for government benefits. While first-party trusts are now more accessible, other types of special needs trusts remain important options as well. The needs, sources of funding, and family situation determine which type of trust is most appropriate.

Types of Special Needs Trusts

Special needs trusts are an important tool for providing supplemental support while preserving eligibility for government benefits. There are a few main options when establishing a special needs trust, each with its own rules, benefits, and drawbacks. Choosing the right trust starts with understanding the different types available:

1. First-Party Special Needs Trusts: Funded with the assets of the individual with disabilities. These trusts are often used when the individual receives a settlement, inheritance, or other personal funds.
2. Third-Party Special Needs Trusts: Funded by someone other than the individual with disabilities, such as a parent or grandparent. These trusts do not require payback provisions upon the beneficiary’s death.
3. Pooled Special Needs Trusts: Managed by nonprofit organizations, these trusts pool resources from multiple beneficiaries for investment purposes while maintaining separate accounts for each beneficiary.

Preparing for the New Rules

To ensure compliance with the new rules and make the most of a special needs trust, consider the following steps:

1. Consult with a Professional: Work with an attorney or financial advisor who specializes in special needs planning to understand the implications of the new rules and how they apply to your situation.
2. Review Existing Trusts: If you already have a special needs trust in place, review it to ensure it complies with the new regulations. Make any necessary amendments to maintain eligibility for benefits.
3. Educate Yourself: Stay informed about the latest developments in special needs trust law. Resources like the Special Needs Alliance and other advocacy organizations can provide valuable information and support.

By understanding and preparing for the new special needs trust rules, you can ensure that you or your loved one continues to receive the support and benefits needed to thrive.

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I hope this detailed blog post helps you understand the new special needs trust rules for 2024. If you have any specific questions or need further assistance, feel free to ask! https://www.specialneedstrustsonline.com