
Parents of a child with disabilities will naturally worry about their child's financial security and well-being after they are gone. Special needs planning helps them establish a strategy to support their child and improve their quality of life. This planning can include creating guidelines for medical care, managing assets, and safeguarding those assets from creditors and other threats. A crucial part of this planning is setting up a special needs trust. Like other trusts, this trust places assets under the control of a trust advisor who manages the financial needs of the disabled child. These are known as third-party special needs trusts and are funded with assets or life insurance from the parent or another individual.
If the disabled person acquires their own funds, whether through inheritance or legal settlements, a first-party special needs trust can manage these assets and offer protection from creditors. Additionally, first-party special needs trusts help maintain eligibility for public benefits such as Supplemental Security Income and Medicaid.