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How special needs trusts are used

Some Ohio residents might wonder what a special needs trust is and if one might be helpful in an estate plan. A special needs trust can help a person who receives government benefits get additional assistance without having to forfeit the benefits.

Trusts are, in general, documents that create a three-way relationship. There is the person who creates the trust, the trustee and the beneficiary. The job of the trustee is to manage the trust responsibly.

There are three different kinds of special needs trusts. A first-party trust may be created for a person who has special needs and has assets such as compensation from a lawsuit or an inheritance. If other people have assets that they want to go to the beneficiary, then a third-party trust is needed. Finally, if there are a number of beneficiaries with special needs, this requires a pooled trust.

While a person who receives Supplemental Security Income is not permitted to have assets of more than $2,000, it is legal for them to place assets such as settlements and inheritances in a first-party trust. A special needs trust can also be used to reduce the size of an estate for the purpose of either taxes or to qualify for long-term care coverage using Medicaid.

Trusts have a number of other uses as well. For example, an estate owner might be concerned about whether a beneficiary will be responsible with the assets in a trust. The trust could be set up so that the beneficiary only receives distributions at certain times, or the distributions could even be at the discretion of the trustee. Trusts can be used to protect assets for minor children and to donate to charity. People who are considering using trusts as part of an estate plan might want to talk to a lawyer about the advantages and disadvantages.

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Kroener Hale Law Firm
101 N. Riverside Dr.
Batavia, OH 45103

Phone: 513-716-5940
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With offices in Batavia, Cincinnati and West Chester, Ohio we serve clients throughout Clermont and Hamilton Counties