How to Establish a Special Needs Trust

Establishing a special needs trust

The steps for creating any Trusts are simple. All the is requires is to sign the trust documents and fund the Trust with money or other assets.

The steps to create a Special Needs Trust are simple, however, they will differ depending on the type of Special Needs Trust that you want to create. Listed below are the three basic types of Special Needs with a summary and description of how to establish each. See out page, What is a Special Needs Trust, if you would like to review the differences between each of these Trusts.

A Third Party Special Needs Trusts is a type of Special Needs Trust that is typically created by a family member of the Trust beneficiary, however, it can be established by any independent party. These Trusts cannot be held assets that previously belonged to the Trust Beneficiary. To create a Third Party Special Needs Trust, the family member needs to sign the trust document and then proceed to transfer the asserts to the Trustee. The trust document is provided by an attorney who represents and writes all of the imperative documents.

A Non-Pooled Special Needs Trust is one of the two types of Special Needs Trusts that must be created with assets that previously belonged to the Trust beneficiary. These Trusts must be created according to specific legal requirements.

For many years, specific legal requirements forbid the individual Trust beneficiary from signing their own trust document. Alternatively, the trust document could only be signed by the Trust beneficiary’s parent, grandparent, or legal guardian. Even though the Trust must be funded with the beneficiary’s assets, the Trust beneficiary is not permitted to sign the trust document under any circumstances.

This probation was eliminated as of December 13, 2016 when former president Obama signed the 21st Century Cure Act into law (the “Act”). Section 5007 of the Act amended Section 1917(d)(4)(A) of the Social Security Act (42 U.S.C. §1396p(d)(4)(A)) by adding the word “individual” to the category of parties who are authorized to create a Special Needs Trusts.

The law simply states that the Trust beneficiary could not sign his or her own trust document. Changing the law showcased a positive development as it simplified the process of creating a Special Needs Trust. After the Trust is signed by an individual or established by a Court, the beneficiary’s assets can then be transferred to the Trustee. The trust document is given by an attorney who provides legal representation, obtains a Court order if necessary and writes all the necessary documents.

A Pooled Special Needs Trust is another type of Special Needs Trust that must be funded with assets that belong to the Trust beneficiary. These Trusts must also be created regarding specific legal requirements. The Trust document must be signed by the individual, grandparents, parent, legal guardian or created by a Court. The beneficiary’s assets can be transferred to the Trustee once the Trust has been signed.

Another specific legal requirement for Pooled Special Needs Trusts is that a non-profit association must administer them. The Pooled Special Needs Trust documents are provided by the Trustee rather than being written each time by an attorney due to the fact that they are administered by a non-profit Trustee. A Master Trust is created by the non-profit Trustee and a second trust document which is called a Joinder Agreement. A Joinder Agreement is used to establish an individual Trust account for the beneficiary.

Pooled Trusts say that assets can be pooled for investment and management purposes according to the Medicaid and Social Security laws, however, separate accounts must always be maintained for each beneficiary. Global Litigation Consultants offers a National Pooled Trust as a non-profit Trustee as well as an array of 18 different State Pooled Trusts.

Disclaimer: The information provided through these blog posts does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available through these blog posts are for general informational purposes only.

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