Third-Party Funded Special Needs Trust

A key component of special needs planning, a Special Needs Trust (or Supplemental Needs Trust) is a critical financial tool to guarantee the security of the assets, benefits, and the overall well-being of an individual with special needs.  One type of trust is a Third-Party Funded Special Needs Trust (TPF-SNT). This is different from a Self-Funded Special Needs Trust (SF-SNT) and a Pooled Special Needs Trust.

How do I create a Third-Party Funded Special Needs Trust in North Carolina?

A Third-Party Funded Special Needs Trust (TPF-SNT) is funded by other people, not by the individual with special needs who will benefit from the Trust.  It’s often created as part of a family’s estate planning or in instances when there will be fundraising for an individual with special needs.   Most parents want to ensure that their children, especially those with special needs, are provided for, and taken care of, when they are no longer here.

At Weaver, Bennett & Bland, our Charlotte attorneys special needs planning and creating third-party funded special needs trusts in North Carolina or South Carolina. Contact us today at (704) 844-1400 schedule an appointment to meet with one of our experienced Elder Law or Special Needs Planning lawyers in the Charlotte area.

Can I leave money directly to an individual with special needs?

To ensure that their children with special needs are cared for, parents may create Wills that, upon their passing, directly distribute assets among their children.  However, leaving money outright to an individual with special needs (whether a child or other loved one) may cause him to become ineligible for public benefits.

By utilizing a TPF-SNT to receive monies intended for an individual with special needs, the monies in Trust can be used for the benefit of the trust beneficiary, allowing him to remain eligible for public benefits.   A TPF-SNT should also be named as the beneficiary or retirement plans and insurance policies instead of naming an individual with special needs outright.  When establishing a TPF-SNT, certain requirements are imposed by the Division of Medical Assistance and Social Security Administration and must be included.

Can I leave money to a relative to care for an individual with special needs?

Be cautious about leaving money to a relative with the intent to use it to care for an individual with special needs. That relative has no legal obligation to use the money as you direct; he could die, resulting in the money passing to his heirs which may not include the individual with special needs; he could get divorced, potentially subjecting the money to equitable distribution; or could be sued, exposing it to creditors.