What is the difference between a special needs trust and a living trust?
QUESTION: What is the difference between a special needs trust and a living trust?
ANSWER BY RICK COURTNEY:
What’s the difference between a special-needs trust and a living trust? Well, they are both trusts. They are two different types of trusts. A living trust is an estate planning tool that I may use as a substitute for just having a will.
I can create a living trust now, which means I create it while I’m living and I establish who will be the trustee to hold the assets, either while I’m living or after my death, and who the beneficiary will be.
The living trust can allow the trust to be for my benefit while I’m living, and then for the benefit of my spouse or children after my death, and I put assets in that trust. It’s created while I’m living. That’s called a living trust.
A special-needs trust is another type of trust similar to it, but it is there to provide for a person with a disability, a child, a grandchild or a spouse who has a disability. There is frequently some extra language in that trust that advises the trustee how to make payments or disbursements for things like therapy and medical treatment that’s not covered by Medicaid or similar things.
So the special-needs trust is a type of trust that is used to provide assets and resources to take care of a person with a disability, while the living trust is a will substitute that I might use in place of having a will for my estate plan. Our firm will be happy to help you determine the type of trust that best fits your needs.
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