The concept of a trust fund often carries a certain mystique to it, but it need not be complicated and unattainable. People often create trusts to help manage assets and to protect those assets for the future. In this way, a legal settlement shouldn’t simply be considered as a payout. Part of a good settlement plan is planning for the future. Regardless of a person’s level of wealth, protecting the individual’s health, wealth and life are components of a strong settlement plan.
According to Secured Futures, trusts are “legal documents that govern how a third party (a trustee) is to own and administer certain assets on behalf of another individual.” Within a trust, there will be specific rules that the trustee is obligated to follow, otherwise there will be legal issues, so when learning about setting up a Trust, it’s important to understand the different types available.
Popular Types of Trusts
Minors Trust: When a child inherits or is awarded large sums of money, it’s imperative that the money be protected from careless spending and budgeted appropriately so that the child’s financial future is secure. A blocked Minors Trust can be an excellent vehicle to hold and protect the assets until the minor reaches the age of majority.
Support Trust: A discretionary trust where a trustee pays income to the beneficiary based on a pre-determined set of guidelines. A Support Trust offers spendthrift protection which can prevent wasteful dissipation of the trust’s funds.
Preservation Trust: a flexible trust option designed to comply with Court Orders associated with preserving spendthrift protection associated with the receipt of legal settlements or other financial allocations.
Special Needs Trust: In order to protect the money or property of a loved one with a disability, a Special Needs Trust should be considered so as to not jeopardize your loved one’s ability to receive Supplement Security Income (SSI) and Medicaid benefits. A special needs trust includes all the same legal protections for your estate and assets except that it takes the needs of children and adults with special needs into consideration. Many opt to “pool” their special needs trust, meaning that you don’t need to have an attorney draft anything. In this way, a pooled special needs trust is cheaper to set up and provides a smoother advisory experience.
Why Consider A Special Needs Trust as Part of the Settlement Plan?
A Special Needs Trust helps to ensure that the individual’s loved ones with disabilities receive a lump sum of money, real estate, stocks, or other investments. Because the primary purpose of a Special Needs Trust is to enhance the quality of life of the beneficiary with a disability, the list of things that can be paid for is quite broad, including caregiving, life experiences such as travel or concerts, service such as cell phone or house care, and other material things like computers or furniture.
Creating a Special Needs Trust can be a somewhat complex endeavor, however, so be prepared to work with a professional like Secured Futures or your Ringler settlement consultant.
As the largest settlement planning company in the country, Ringler offers the best consultants to help with all parties involved in a settlement. From setting up a variety of Trusts to working out the best settlement solutions for your case, Ringler is here for you and your loved ones. You can learn more about our services here.
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