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Planning For the Future
with a Special Needs Child - Part 1
The Child’s Long-Term Needs

By Harry S. Margolis and Eric Prichard

(Page 3 of 3)

So which type of trust is the right one to set up? Both, actually. The third-party trust is important because you can place funds into it while alive, and through your will, life insurance policies and retirement accounts when you pass away, and the funds can be used without fear of government reimbursement. As for a first-party trust, since only a parent, grandparent or court can create it, we recommend creating one at the same time as the rest of your estate plan. Doing this ensures that the trust is available if or when your child comes into his own funds and needs to shelter them in the trust.

A variation on the first-party trust is a pooled disability or (d)(4)(C) trust. Like the first-party or (d)(4)(A) trust, this trust is to be funded with the beneficiary’s own funds, which fall under a special safe-harbor in the law that permits their creation and management by non-profit associations for any number of beneficiaries. Unlike the (d)(4)(A) trust, a disabled beneficiary herself can fund such a trust without the participation of a parent, grandparent, guardian or court. This can be very useful when there is no appropriate trustee to manage funds for a disabled beneficiary.

 


Harry S. Margolis is the founder of ElderLawAnswers.com and co-founder of the Academy of Special Needs Planners (ASNP). Special needs planner Eric Prichard is a staff attorney with ASNP. To find a well-qualified attorney who specializes in helping families with special needs, as well as additional background and news on special needs planning, visit Special Needs Answers at specialneedsanswers.com.

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