For many people living with a disability, government benefits like Supplemental Security Income and Medicaid are vital to their support. However, strict income and asset restrictions come with benefits from these programs.
A dedicated special needs planning attorney may be able to protect your assets and eligibility for these important benefits with a first party special needs trusts in Virginia Beach. Government means testing is strictly enforced, making it vital that you comply with the law at every step.
What is a First-Party Special Needs Trust?
Also known as a self-settled trust, this type of trust allows a person with a disability to establish, fund, and benefit from a trust, provided such funding occurs prior to age 65. It differs from third-party trusts, which are set up by and funded with the assets of someone else for the benefit of someone with a disability.
The importance of the first party special needs trust is that it allows the grantor, the person establishing the trust, to store assets and generate income that will not count against a person with a disability for means testing. The trust becomes the legal owner of funds used to create it, allowing a person to have that money without breaking the rules regarding assets and income.
For these trusts to work it must be irrevocable and setup by the individual with a disability, or their parent, grandparent, legal guardian, or a court for the sole benefit of the individual with a disability. That means the person cannot later terminate or change the terms of the trust. The law also requires the beneficiary to be under the age of 65 as the time of establishment and funding. The trust must also contain a Medicaid payback provision.
Limits exist on how this money can be used. A beneficiary is limited to paying for things that are supplemental expenses, meaning they are not covered by other benefits. For example, it can cover education costs but typically may not pay for medical expenses.
These rules are complex, and mistakes are common. The best way to ensure compliance for beneficiaries is by working with an experienced attorney. They can answer questions and make certain the correct approach is used.
Available Funding Options
The source of funds for this process varies, given that every person with a disability is in a unique situation. One of the most common ways to set up a Virginia Beach first party special needs trust is through the proceeds of a personal injury lawsuit.
Many people living with debilitating injuries reach a settlement with the at-fault party or their insurance company. The money that comes from these agreements can be life-changing, but it is important to protect it now and in the future. The right approach could ensure this money does not cause ineligibility for government benefits.
This option is valuable even for those without civil claims stemming from accidental injuries. A person with a chronic disease, for example, could fund the trust with retirement savings, an inheritance left outright, or other personal assets.
The support of an attorney through this process is invaluable. Legal counsel can review the paperwork and the source of funds to ensure everything complies with the law.
Contact an Attorney in Virginia Beach About First party Special Needs Trusts
If you are considering a first party special needs trust in Virginia Beach, you could benefit from the guidance of an attorney who understands the process. Relying on their help can ensure that you do not put these funds at risk. Call right away to learn more.