Are you aware of the fact that there is more than one type of special needs trust in Seattle Washington? Many people who begin to look into this realize that they have a big decision to make. Each type of trust has its own set of pros and cons, so it is important to know the limitations of each one while developing a plan for the future.
Types of Special Needs Trust in Seattle Washington
First Party Special Needs Trust
This type of trust is funded with money from one of two sources (or both):
- Money that is already owned by the disabled individual
- Money that the individual can legally claim
With this type of trust, funds must be moved from the disabled person’s control to a trustee, meaning that the court must authorize the move.
Note: a first party special needs trust can only be established by the person’s parent, grandparent, the court, or the legal guardian.
Third Party Special Needs Trust
Also known as a supplemental needs trust, this can be established by anybody other than the disabled person. This trust can be established by any funds that the disabled person does not own or control. The primary benefit of this setup is that others can help the person without the possibility of disqualifying them for Medicaid benefits.
Generally speaking, a third party special needs trust is funded by life insurance or a will (and in some cases a lawsuit settlement).
Pooled Special Needs Trust
A pooled trust is unique in many ways, most notably in the fact that the funds are “pooled” and then managed by a nonprofit organization. The funds managed by the organization are invested as a whole, however, the funds for each beneficiary are kept separate.
Which Type of Special Needs Trust is Best?
Now that you know the basics of each type of special needs trust, you have to determine how to move forward. Since there are many pros and cons of each, more so than what is included in this piece, the best thing you can do is contact an experienced estate planning attorney.
Everybody is faced with a different situation, which is why all three types of trusts are used often by people throughout the country. With the assistance of an attorney, you can learn more about each one while comparing the pros and cons to your current situation as well as what you are hoping to accomplish over the long run.