Can a Special Needs Trust Be Revocable?

You may have a loved one with special needs who is financially dependent on you. So you may want to, obviously, ensure that they continue to be financially taken care of when you are no longer around to do so yourself. This may have you looking into a special needs trust. However, you may be hesitant with the amount of control you may maintain with establishing this trust type. In other words, you may be unsure whether this trust type is revocable or irrevocable. Continue reading to learn whether a special needs trust can be revocable and how one of the experienced Butler County special needs planning attorneys at Heritage Elder Law & Estate Planning, LLC can help you establish one properly.

What is a special needs trust?

Before all else, you must understand the key functions of a special needs trust. Well, generally speaking, this trust type may allow your loved one with special needs (i.e., your beneficiary) to remain eligible for needs-based government benefits that would otherwise have an asset limit, all while reaping the benefits of the trust.

Specifically, examples of such needs-based government benefits are Medicaid and Supplemental Security Income. Further, a trustworthy individual (i.e., your trustee) is charged with supplementing, instead of replacing, your loved one’s needs-based government benefits with the trust’s funds. This supplemental income may cover medical and dental costs not covered by Medicaid, as an example.

Is it possible for a special needs trust to be revocable?

Now, as the individual creating and funding the special needs trust (i.e., the grantor), you must understand whether it is revocable or irrevocable. On the one hand, revocable means you can change the trust’s terms and conditions at any point during your lifetime. On the other hand, irrevocable means the exact opposite.

With that being said, a third-party special needs trust may be revocable. This is because this specific trust type may be funded by your assets rather than your beneficiary’s. Specifically, you may fund it with the gift or inheritance you wish to leave behind for your beneficiary, along with the proceeds from your life insurance policy. Of note, a third-party special needs trust can also be irrevocable.

However, a first-party special needs trust can only be irrevocable. This is because your beneficiary must fund this specific trust type with their own assets and income. Specifically, this specific trust type tends to be funded by the beneficiary’s personal injury settlement award or direct inheritance.

Each trust type has its pros and cons, so you may seek legal advice before landing on a final decision. In conclusion, you should not second-guess your decision to retain the services of one of the skilled Butler County estate planning & probate attorneys. This is because we can guarantee someone at Heritage Elder Law & Estate Planning, LLC can guide you through every step.