• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • Our Firm
    • About Our Firm
    • Attorney and Staff Profiles
  • Services
    • Asset & Business Planning
    • Dental Practice Law
    • Estate and Gift Tax Figures
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Financial Planning Assistance
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • LGBTQ Estate Planning
    • Medicaid and Elder Law
    • SECURE Act
    • Special Needs Planning
    • Trust Administration
  • Elder Law
    • Coping With Alzheimer’s
    • Emergency Medicaid & Nursing Home Planning
    • Guardianship & Conservatorship
    • Hospice Care
    • Medicaid Planning
    • Veteran’s Benefits
  • Resources
    • DocuBank
    • Elder Law
      • Elder Law & Medicaid Definitions
      • Elder Law Reports
      • Elder Law Resources
        • Carmel, Indiana Elder Resources
        • Fishers Indiana Elder Law Resources
        • Greenfield, Indiana Elder Law Resources
        • Greenwood Elder Resources
        • Indianapolis Elder Law Resources
        • Lawrence Elder Law Resources
        • Plainfield Elder Resources
        • Zionsville Elder Law Resources
    • Estate Planning
      • Estate Planning Checkup
      • Estate and Gift Tax Figures
      • Estate Planning Definitions
      • Estate Planning Reports
        • Advanced Estate Planning
        • Basic Estate Planning
        • Estate Planning for Niches
        • Trust Administration
      • Incapacity Planning Definitions
      • Is Your Estate Plan Outdated?
      • Top 10 Estate and Legacy Planning Techniques
    • Free Estate Planning Worksheet
    • Frequently Asked Questions
      • Asset Protection Planning
        • Business Succession Planning
      • Elder Abuse
      • Elder Law
        • Medicaid
        • Medicaid Planning
        • Planning for Long-Term Care
      • Estate Planning
        • Avoiding Estate Taxes
        • Estate Planning for Parents
        • Frequently Asked Questions for Families Without an Estate Plan
        • LGBTQ Estate Planning
        • Women and the Need for Estate Planning
      • Financial Planning
      • Incapacity Planning
      • Legacy Wealth Planning
      • Pet Planning
      • Philanthropy in Your Estate Plan
      • Probate
      • Power of Attorney
      • Small Estate Administration
      • Trusts
        • Trust Administration
        • Trust Administration
        • Serving as Executor
      • Understanding Your Social Security Retirement Benefits
      • Wills
        • Contesting a Will
    • Newsletter
    • Pre Consultation Form
    • Probate and Trust Administration
      • Bereavement Resources
      • How to Know if You Need Extra Help With Your Grieving
      • Loss Of A Loved One
      • Probate Resources
        • Carmel, Indiana Probate Resources
        • Greenfield Probate
        • Greenwood Probate
        • Indianapolis Probate
        • Plainfield Probate
        • Indiana Probate
        • Zionsville Probate
      • Things You Need To Do When a Loved One Passes Away With a Trust
      • The Mourner’s Bill of Rights
      • Things You Need To Do When a Loved One Passes Away With a Will
      • Trust Administration & Probate Definitions
  • Reviews
    • Our Reviews
    • Review Us
  • Areas We Serve
    • Boone County
      • Lebanon
      • Zionsville
    • Hamilton County
      • Carmel
      • Fishers
    • Hancock County
      • Greenfield
    • Hendricks County
      • Brownsburg
      • Plainfield
    • Johnson County
      • Franklin, Indiana
      • Greenwood
    • Marion County
      • Central Indiana
      • Indianapolis
  • Blog
  • Contact Us

Frank & Kraft, Attorneys at Law

Indianapolis Estate Planning Attorneys

CONNECT WITH US TODAY(317) 684-1100

Attend a Free Workshop
Home » Are There Different Types of Special Needs Trusts?

Are There Different Types of Special Needs Trusts?

September 4, 2019Special Needs Trust

Indianapolis special needs planning attorney

Estate planning is always important for parents of young children. That same planning takes on a heightened importance when you are the parent (or grandparent) of a child with special needs. In fact, without proper planning, your efforts to provide for your child could actually do more harm than good. One estate planning tool that is often used to provide for a beneficiary with special needs is a special needs trust. To help you better understand your options, an Indianapolis special needs planning attorney at Frank & Kraft explains the different types of special needs trusts.

Why Traditional Estate Planning Tools May Not Be Enough

As a general rule, a child with special needs will grow up to be an adult with special needs. The law will consider your child to be an adult when he/she reaches the age of 18 without regard to your child’s functional abilities. Consequently, there is a good chance that your adult child will continue to depend – to varying degrees — on state and federal assistance programs such as Medicaid, Medicare, or SSI. Those programs, however, typically have income and asset limits that cannot be exceeded by recipients. Gifting assets to someone with a disability or special needs, therefore, can result in disqualification for many of these much-needed programs. The good news is that a special needs trust often presents a solution to this common dilemma.

What Is a Special Needs Trust?

A special needs trust, also referred to as a “supplemental” needs trust, is an irrevocable living trust that is specifically designed to protect assets intended for a beneficiary with special needs without jeopardizing the beneficiary’s eligibility for assistance programs. There are two types of special needs trusts that are commonly used, including:

  • Third party special needs trust — as the name implies, a third party special needs trust is established by a third party with assets owned by the third party for the benefit of a person with a disability or with special needs. This type of trust is most often established by a parent, or other family member, for the benefit of a child with special needs. A third party special needs trust is funded using assets gifted by the parent, grandparent, or other family members. This type of trust must include specific language and must be worded such that the assets in the trust are actually distributed to a third party, such as the parent, to be used for the benefit of the individual with special needs. Because the assets held in the trust are not available to the beneficiary, those assets do not disqualify the beneficiary from eligibility for assistance programs such as Medicaid and SSI.
  • First party special needs trust – also referred to as a “self-settled” trust, a first party special needs trust is established using assets of the disabled individual or person with special needs. The beneficiary of the trust must be someone with special needs or who is disabled. The trust is actually established by a parent, grandparent, guardian of the person with special needs, or by a court; however, it is funded using assets owned by the beneficiary. This type of special needs trust is most frequently needed when a disabled individual receives a lump sum of money, such as the result of a settlement for injuries in a personal injury accident. In the absence of the trust, the lump sum received by the beneficiary would likely disqualify him/her from eligibility for assistance from Medicaid, SSI, and other state and federal assistance programs. One of the other important differences between a third part and a first party special needs trust is that with a first party trust, any assets remaining in the trust upon the death of the beneficiary must be used to pay back Medicaid. With a third party special needs trust there is no need to worry about repaying Medicaid.

Contact an Indianapolis Special Needs Planning Attorney

For more information, please download our FREE estate planning worksheet. If you have additional questions about the different types of special needs trusts, or if you wish to discuss special needs planning for your estate plan, contact an experienced Indianapolis special needs planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.

  • Author
  • Recent Posts
Paul A. Kraft, Estate Planning Attorney
Paul A. Kraft, Estate Planning Attorney
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.

Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
Paul A. Kraft, Estate Planning Attorney
Latest posts by Paul A. Kraft, Estate Planning Attorney (see all)
  • Is a Senior Life Settlement Right for Me? - February 2, 2023
  • Understanding the Annual Exclusion - January 31, 2023
  • Updated Federal Gift and Estate Tax Figures for 2023 - January 26, 2023

Other Articles You May Find Useful

Indianapolis special needs planning attorney
What Is a Memorandum of Intent for a Special Needs Trust?
special needs trust in the Medicaid
Can Medicaid Recover Assets From a Special Needs Trust?
Frank & Kraft, Attorneys at Law
Free Report: What Is a Special Needs Trust in Indiana

Primary Sidebar

Frank & Kraft, Attorneys at Law

Download our free Estate Planning Worksheet

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.

Follow Us

  • Facebook
  • Twitter
  • Linkdin
  • Youtube

Blog Subscription

Where We Are

Frank & Kraft Attorneys at Law
135 N. Pennsylvania Street Suite 1100
Indianapolis, IN 46204-2485
Phone: (317) 684-1100
Fax: (317) 684-6111

See Larger MapGet directions

Office Hours

Monday8:00 AM - 5:00 PM
Tuesday8:00 AM - 5:00 PM
Wednesday8:00 AM - 5:00 PM
Thursday8:00 AM - 5:00 PM
Friday8:00 AM - 5:00 PM

Map

frankkraft_sidbr_map

Footer

  • Advantages of Working With Our Firm
  • About The American Academy
  • Disclaimer
  • Privacy Policy
  • Sitemap
  • Contact Us

Connect with Us

  • Facebook
  • Twitter
  • Linkdin
  • Youtube
footer-logo

Frank & Kraft Attorneys at Law
Attorney Advertisement

© 2023 American Academy of Estate Planning Attorneys, Inc.

© 2023 · American Academy of Estate Planning Attorneys, Inc. | Disclaimer | Privacy Policy | Sitemap | Contact Us