It’s important to have a comprehensive guide to trusts for people with disabilities at your disposal. In fact, these trusts, play a crucial role in supporting individuals with disabilities. Generally created by close relatives, these trusts are commonly funded through inheritances. They serve the purpose of meeting the needs of people with disabilities while protecting their benefits from federal, state, and local agencies.
How to Fund A Trust
Trusts for people with a disability offer a valuable solution for individuals with disabilities who need financial aid while preserving their eligibility for government benefits. Trusts play a crucial role in safeguarding funds from health insurance companies, Medicaid, and other creditors. This becomes especially important when individuals with developmental disabilities receive funds directly from lawsuits related to accidents or injuries. Self-settled trusts are required to adhere to federal and state laws, including reimbursement obligations. Furthermore, these trusts, also referred to as D(4)(a) Trusts, must submit an annual accounting report to the state.
It is possible to enhance the quality of life for a person with a disability regardless of their age with the help of a trust. A trust can be used to purchase physical and emotional therapy, counseling, assistive technology, travel, as well as additional nursing and respite care. In addition, they can meet other needs not covered by government assistance. Different types of Trusts exist, each with its own rules and requirements.
Third-Party Trusts for People with a Disability
Anyone, including parents, grandparents, siblings, and other family members, can establish third-party trusts for their loved ones with a disability. These trusts are funded with assets that do not belong to the individual with disabilities. Unlike self-settled trusts, third-party trusts are not bound by reimbursement requirements.
To learn more about this topic, please refer to Chapter 7 of A Layperson’s Guide to Estate Planning e-book. This valuable reference is available for download by clicking above, or by contacting The Law Offices of James A. List, LLC at 410.337.5340.