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Establishing a trust for a special needs family member

On Behalf of | May 30, 2024 | Estate Planning |

Planning for the future of a family member with special requires strategic financial planning. Establishing a trust is a good gesture to help ensure their financial security and long-term care.

In Washington, a Special Needs Trust (SNT) can be beneficial, providing a way for individuals to manage their assets without disqualifying them from government benefits such as Medicaid and Supplemental Security Income (SSI).

How to create a special needs trust

When creating a Special Needs Trust (SNT), you need to decide on the type of trust:

  • A first-party trust, funded with the beneficiary’s assets and often established through an inheritance or personal injury settlement
  • A third-party trust, funded by parents, grandparents or other relatives

Each trust type has different rules and tax implications. After settling on the type of trust:

  • Choose a trustee: The trustee will run the assets and help ensure they are used to benefit the intended party. It’s important to choose a trustworthy and financially savvy trustee familiar with the beneficiary’s needs.
  • Draft the trust document: This document shows the terms of the trust and specifies how to manage and distribute the trust assets. It’s vital that you seek legal guidance to help ensure the trust complies with Washington state laws and federal regulations.
  • Fund the trust: Transfer the desired assets into the trust. It can include cash, real estate, stocks or other property. When transferring real estate, it’s crucial to have a deed transferring the property to the trust. This process may involve additional steps in Washington, such as obtaining a real estate excise tax statement.
  • Maintain compliance: Once the trust is established, the trustee must manage it according to the terms set forth in the trust document, helping ensure compliance with all applicable laws.

Putting up a trust for a family member with special needs is a thoughtful and prudent step to secure their future.

By creating a trust that complies with state and federal regulations, you can better ensure that your loved one receives the financial support and care they need without compromising their eligibility for public benefits. Proper planning and the guidance of a qualified legal team are vital in creating a trust that provides peace of mind and long-term security.