Understanding Special Needs Trust Rules and Regulations
A typical trust fund is a legal structure that holds assets in an account until the beneficiary of the trust is eligible to receive them. Usually, this happens when the beneficiary reaches a certain age or the grantor — the person who legally established the trust for the benefit of the recipient — has passed away. Unlike a regular trust, a special needs trust (SNT) is bound by different and complex regulations and rules. It's essential to follow those rules carefully when creating an SNT to avoid interfering with the beneficiary's ability to receive forms of assistance like Medicaid benefits and Supplemental Security Income (SSI).
There are two main types of SNTs: first-party and third-party. This is an important distinction when setting up an SNT properly because it determines how the trust is drafted and administered. In both cases, however, there are many benefits to setting up a trust for a loved one with special needs. Regardless of the type of SNT trust that a grantor chooses, understanding the rules that apply to SNTs is a top priority. If you're considering setting up this type of trust get started by learning the basics about what these trusts are and how to manage them.