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Types of Special Needs Trusts

If you are caring for a person who has special needs, then setting money aside to meet their needs is essential. At the same time, however, if you do not structure the account correctly, then you can hurt their chances of qualifying for government-funded medical care, low-cost housing, and other opportunities. There are at least three types of special needs trust funds that you may want to consider as each has its benefits.

Family-type Special Needs Trusts

The parents of a special needs' individual can set up a family-type special needs trust by funding it while they are alive, or they leave directions in the trusts creation in their will.  Other individuals can also place money in the trust fund once created. Often, the money comes from the parents' life insurance payment. If the individual is receiving help with housing, clothes, or food, then this money cannot be used for that purpose or government aid may be stopped or significantly reduced. The money can fund travel, education, caregiving, or medical services not provided by the government. A trustee oversees the account.  The trust cannot, however, directly pay the individual or it is considered income.

Pooled Trusts

Families with limited incomes may choose to participate in pooled trusts, instead of a family-type special needs trust. These trusts are governed by a nonprofit who combines many people's money. Like other trust accounts, money can pay for many things that government programs do not cover without being counted as income. Each person has their account, but the nonprofit must approval any dispersals. If any money is left in the account when the person with special needs passes away, then the nonprofit uses the money to help other individuals.

Court-Ordered Special Needs Trusts

Often called Type A special need trusts, these trusts are usually set up by the court system after a person has received a settlement from an accident that has left them disabled. The account can be used to cover the same type of expenses that other trust funds include, however, without disqualifying them from government aid. When the individual passes away, leftover money goes to the state where the individual with special needs lived to help cover medical expenses.

If you loved one has special needs, then it is essential to get guidance about setting up a trust account from an attorney at a family law practice in Altamonte Springs, Florida. Contact Frank Family Law Practice today so that they can give you all the details and discuss your desires with you. Do not delay in talking to a family law practice in Altamonte Springs because you never know what tomorrow holds.