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Trust strategies for supporting people with special needs

Families in Georgia that include a person with special needs must consider that individual's long-term welfare and maintenance. The direct assignment of an inheritance to a person born with disabilities or who was disabled by an accident or disease could likely interfere with government benefits. Generally, someone cannot possess over $2,000 to qualify for Supplemental Security Income. Special needs trusts supply solutions to this problem.

A first-party trust names the special needs person as the beneficiary and holds assets for him or her. The trust allows that person to reduce his or her personal assets below $2,000 and qualify for government assistance. Funds from the trust can be distributed for the person's benefit over the course of his or her lifetime. Upon the beneficiary's death, the trust forfeits any leftover assets to reimburse the government for care.

Another option, known as a third-party trust, works in a similar manner except that it does not give the government remaining assets. When the beneficiary dies, other family members or a charity could receive the leftover funds.

A third solution called a pooled trust acts as a nonprofit entity that represents multiple special needs people. The trust pools their assets for investment purposes but maintains separate accounts for each beneficiary. The death of one account holder splits any leftover assets in that person's account between the government and other beneficiaries.

Someone who wants to plan for the future of a special needs person could consult an attorney. A lawyer could investigate tax issues and requirements for government benefits. After researching the situation, an attorney could recommend to his or her client how to use trusts to meet his or her goals. An attorney could write the terms of the trust and help a person decide whom to name as a trustee.

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