Four Different Types of Special Needs Trusts in Illinois

 Posted on February 26, 2024 in Estate Planning

Special needs trusts are essential tools for individuals with disabilities to ensure their financial security while maintaining eligibility for government benefits. In Illinois, several types of special needs trusts serve different purposes and cater to varying needs. Understanding these trusts is crucial for individuals and families navigating the complex landscape of disability planning. For legal assistance, contact a qualified attorney to ensure you can meet your legal goals.

Third-Party Special Needs Trust

A third-party special needs trust is commonly used by parents, grandparents, or other relatives to provide for a loved one with a disability without jeopardizing their eligibility for government benefits. This trust is funded with the assets of someone other than the individual with a disability. It can be tailored to meet specific needs such as medical costs, education, housing, and more.

First-Party Special Needs Trust

A first-party special needs trust, also known as a self-settled trust, is established with the assets of the person with a disability. This type of trust is often used when the individual receives a windfall, such as inheritance or a legal settlement, and needs to preserve their eligibility for means-tested benefits like Medicaid and Supplemental Security Income (SSI).

Pooled Trust

Another type of special needs trust in Illinois is a pooled trust, which combines the assets of multiple individuals with disabilities for investment purposes. Pooled trusts are managed by nonprofit organizations and offer a cost-effective solution for individuals who may not have enough assets to establish their own trust. This type of trust provides flexibility in managing funds and can be a valuable resource for individuals with disabilities.

Testamentary Special Needs Trust

A testamentary special needs trust is created through a will and only becomes effective upon the death of the grantor. This type of trust allows individuals to provide for a loved one with a disability after their passing while ensuring that the assets are managed according to their wishes and do not affect the beneficiary’s eligibility for government benefits.

Contact Our Kendall County, IL Special Needs Estate Planning Attorney

Ultimately, special needs trusts play a vital role in safeguarding the financial future of individuals with disabilities in Illinois. Families can make smarter decisions to protect their loved ones by understanding the different types of special needs trusts available. Contact the knowledgeable Yorkville, IL special needs estate planning lawyer with Gateville Law Firm. Call 630-780-1034 for a free consultation.