For those with special needs, finding ways to supplement their income while continuing to qualify for essential public benefits can be a challenge. One resource available to someone in this situation is a United Kingdom special needs trust. This type of trust allows a beneficiary to have disbursements made for his or her benefit without interfering with government program requirements. The trust is a means to provide critical financial support which can help the individual live comfortably. Someone with a special need may want to know–Can I Create my Own Trust in United Kingdom?
First-Party v. Third-Party Trusts
There are two types of special needs trusts: First-party and Third-party. The primary difference between the two is the type of assets used to create the trust and what happens to them after the beneficiary dies.
When a trust beneficiary creates a trust with assets which belong to them or which they have a right to possess, the trust is considered to be self-settled or a first-party trust. Under the former law, a special-needs trust beneficiary was not permitted to form his or her own trust. Today, a special needs trust beneficiary is allowed to create a first-party special needs trust. The trust will then be managed by a trustee who will make disbursements for the benefit of the beneficiary. However, when the trust beneficiary dies, part of his or her estate will be taken to repay the state for any Medi-Cal benefits the individual received.
A third-party special needs trust is created with assets which do not belong to the beneficiary and to which he or she was never legally entitled. Just as with a first-party trust, there will be a trustee who makes payments for goods and services for the benefit of the trustee. However, when the beneficiary passes away, the trust assets will not be subject to Medi-Cal estate recovery.
At the Law Offices of Alhayat Solicitors, we have attorneys who have the experience you need to help you with special needs trust planning. Contact us today to schedule your free consultation. /contact/
