Plan For The Future With Confidence

Plan For The Future With Confidence

Can a nonfamily member fund a special needs trust?

On Behalf of | Mar 13, 2024 | Estate planning

Families of individuals with special needs naturally explore ways to protect their loved one’s physical, mental, emotional and financial well-being. A common tool they may consider are special needs trusts (SNT). While there is usually little to no question as to who can create an SNT, there are sometimes concerns about the trust’s contributors.

Funding sources for special needs trusts can vary, which often raises questions about contributions from nonfamily members, especially whether the laws allow them.

Family relationship is not a requirement to fund SNT

While it is often parents who establish special needs trusts for their children with special needs, there is no prohibition as to who can contribute property or funds to the trust. Note, however, that this applies to third-party special needs trusts, funds of which come from someone other than the beneficiary.

Hence, anyone can contribute to a third-party special needs trust, including family members, relatives, friends or even unrelated individuals who wish to support the person with special needs.

Being mindful of other requirements

No matter who funds a special needs trust, it is crucial for those creating the document to comply with the federal and state rules and regulations governing special needs to ensure the trust’s effectivity. Otherwise, the beneficiary may risk losing their eligibility and access to essential benefits.

If you are planning to establish a special needs trust for your loved one, it is advisable to consult with a professional who specializes in special needs planning to ensure that you set up the trust is correctly and ensure its proper management.