Colorado residents who have loved ones with special needs might worry about how they might be cared for during their lives. It is possible for people to establish special needs trusts to benefit their loved ones.
When a special needs trust is established, money is placed in a trust so that the beneficiary can still continue to receive benefits from the government. These trusts are established because of Supplemental Security Income regulations, which state that disabled individuals may not have more than $2,000 in his or her name while receiving benefits. If a disabled person who is receiving SSI receives a substantial sum of money, such as an accident settlement or an inheritance, the regulations mandate that he or she places the funds in a first-party special needs trust that names him or her as the beneficiary.
Families are also able to set up third-party special needs trusts to assist loved ones that have special needs, which can be used to pay for some of the disabled person's regular expenses while he or she continues to receive his or her disability benefits. Once the person with special needs dies, any money that is left in a first-party trust will go to the government to reimburse it for some of the cost of the person's care. In a third-party trust, any money that remains after the individual's death passes on to his or her family members or charity.
People who are worried about how their loved ones with special needs will be taken care of after they die might want to talk to estate planning attorneys about setting up special needs trusts. Lawyers might draft the documents to establish the trusts and assist their clients with choosing trustees to administer them. These trusts might help disabled people live more comfortably throughout their lives.