A third-party trust is established for individuals with special needs and is funded with property that was not originally owned by them. By placing the money or assets in the trust, it is not considered as belonging to the person with special needs, thus enabling them to meet the eligibility criteria for government benefits.
A third-party trust is a special needs trust that is established using assets that were not owned by the beneficiary prior to being placed into the trust. This means that the funds or property used to fund the trust did not originally belong to the individual with special needs. For instance, a parent may create a third-party trust for their child with special needs by utilizing funds from their personal savings account or life insurance policy. Although the child with special needs is the beneficiary of the trust, the assets within the trust were not originally theirs. Another example could involve a grandparent establishing a third-party trust for their grandchild with special needs using funds from their own estate. Once again, the assets in the trust did not originally belong to the beneficiary. These examples exemplify the concept of a third-party trust as it is funded with assets that were not owned by the beneficiary prior to being placed into the trust. This type of trust can be advantageous for families who wish to provide for their loved ones with special needs without jeopardizing their eligibility for government benefits.
A third-party trust is a legal arrangement where a third party holds and manages assets on behalf of a beneficiary.
Anyone can set up a third-party trust, but it is typically done by parents or guardians of a minor or an individual with special needs.
A third-party trust can provide financial security for a beneficiary, protect assets from creditors, and ensure that the beneficiary’s needs are met after the grantor’s death.
A third-party trust can hold a variety of assets, including cash, stocks, bonds, real estate, and personal property.
Anyone can be named as a beneficiary of a third-party trust, but it is typically used for minors or individuals with special needs.
The beneficiary cannot access the assets in a third-party trust directly. The trustee manages the assets and distributes them according to the terms of the trust.
A trustee can be anyone the grantor trusts to manage the assets and distribute them according to the terms of the trust. This can be a family member, friend, or professional trustee.
A third-party trust can be changed or revoked by the grantor as long as they are still alive and have the legal capacity to do so.
The assets in a third-party trust can be distributed to the beneficiary’s heirs or to a charity, depending on the terms of the trust.
To set up a third-party trust, you should consult with an experienced estate planning attorney who can help you create a trust document that meets your specific needs and goals.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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