The couple sat across from me, retirement just a few years away, staring at a $1.4 million problem they didnโt see coming. Their son, who has a disability, was about to inherit $75,000, an amount that would instantly disqualify him from the government benefits that paid for his housing and medical care. Services costing over $72,000 a year. (LTC Costs in 2025)
Their estate lawyer had drafted a “standard” Special Needs Trust. But it was a ticking time bomb, missing the state-specific language that would prevent a catastrophic loss of benefits.
Hereโs the deal. A Special Needs Trust (SNT) is the single most powerful tool to provide for a loved one with a disability without jeopardizing their eligibility for critical benefits like Supplemental Security Income (SSI) and Medicaid. But the conventional wisdom, that just having the legal document is enough, is dangerously wrong.
In my 30 years as a financial planner, I’ve seen more families risk their child’s future due to poorly managed trusts than from having no trust at all. The real failure isn’t in the setup; it’s in the operational details everyone else ignores.
๐ก Avoid the $1.4M SNT Mistake & Protect Your Child’s Future
One critical financial move each week โ straight from 30 years of seeing what goes wrong with trusts.
- โ State-specific SNT compliance strategies (avoid $72K/year benefit loss)
- โ Tax moves that preserve wealth across generations
- โ ISM calculations and Medicaid payback scenarios explained clearly
29 Special Needs Trust FAQsโEverything Parents Need to Know (2026)
You have a child with special needs. And you’re thinking about planning. About their future, about money, about what happens when you’re gone. Someone mentions a Special Needs Trust. SNT. And suddenly you’re drowning in questions.
This guide answers all of them. Watch the video below for a quick overview, or scroll down to read the complete FAQ breakdown with detailed answers. This is the framework special needs planning attorneys use. This is what you need to know before you hire anyone.
Key Takeaways Ahead
In This Guide:
โ
What an SNT is (and why it matters)
โ
Eligibility and setup basics
โ
Money management and government benefits
โ
Trustee selection and responsibilities
โ
Tax implications and filing requirements
โ
What happens after you’re gone
โ
The biggest mistakes parents make
โ
How to verify your plan works
Special Needs Trusts: The Foundation
A Special Needs Trust preserves eligibility for government benefits by holding assets for, but not directly giving them to, a person with a disability.
Here’s what most advisors miss: the trust acts as a protective bubble, allowing the trustee to pay for supplemental needs (things benefitsย don’tย cover) without violating the strict asset limits of programs like SSI (typically $2,000 for an individual).
๐ก Michael Ryan Money Tip:
A Special Needs Trust is not a savings accountโit’s a legal shield. The trust owns the assets; the trustee controls them; the beneficiary benefits from them. This three-way separation is what protects government benefits. Most families conflate “having a trust” with “the trust working correctly.” They’re very different.
Before we go deeper, here’s what you need to know upfront:
โก Key Takeaways
- Benefit Preservation is the Goal: An SNTโs primary job is to hold assets so a person with a disability can maintain eligibility for means-tested benefits like SSI and Medicaid.
- Two Flavors, One Big Difference: Aย Third-Party SNTย is funded by parents or family and is NOT subject to Medicaid payback. Aย First-Party SNTย is funded with the beneficiary’s own assets (like a settlement) and IS subject to Medicaid payback upon death.
- It’s Not “Their” Money: Assets in the trust are legally owned and managed by a trustee. The beneficiary cannot demand payments. This is the key to why it works.
- State Law is King: Medicaid is state-administered. A trust that is perfect in Texas could be a compliance disaster in Florida. Generic advice is dangerous.
How a Special Needs Trust Actually Works
An SNT is not a bank account; it’s a legal entity with its own tax ID number that you create with an attorney. The process follows a clear path:
- Draft the Legal Document: An attorney creates the trust document, naming a trustee (to manage it) and a beneficiary (the person with a disability).
- Fund the Trust: Assets are transferred into the trust. This can be cash from parents, an inheritance, or a direct payment from a legal settlement.
- Trustee Manages Assets: The trustee invests and manages the funds according to the trust’s rules.
- Pay for Supplemental Needs: The trustee uses the funds to pay for non-covered expenses directly to vendors. This can include education, travel, hobbies, a vehicle, and more. The money should not be given directly to the beneficiary.
First-Party vs. Third-Party SNT: The One Distinction That Matters Most
Understanding this difference is critical. Getting it wrong can cost your family hundreds of thousands of dollars.
Choosing between a first-party and third-party Special Needs Trust is one of the most consequential decisions in disability planning. The critical difference lies in who funds the trust and what happens to remaining assets after the beneficiary’s death. First-party trusts protect a beneficiary’s own assets (inheritance, settlement) but trigger Medicaid payback; third-party trusts let parents fund ongoing support without state reimbursement claims. Understanding this distinction determines whether your family preserves wealth across generations or loses it to state recapture.
| Comparison Factor | First-Party SNT | Third-Party SNT |
|---|---|---|
| Who Funds It? | The beneficiary’s own assets (e.g., personal injury settlement, inheritance, lawsuit award). | Assets from anyone else (e.g., parents, grandparents, siblings, or other family members). |
| Medicaid Payback Requirement | โ YES. When the beneficiary dies, the state must be repaid from remaining trust funds for all Medicaid expenses paid during the beneficiary’s lifetime. | โ NO. Remaining funds can pass tax-free to other family members, charities, or beneficiaries named in the trust. |
| Primary Use Case | Protecting a windfall to preserve SSI/Medicaid eligibility (e.g., unexpected $200k settlement would otherwise disqualify beneficiary). | Estate planning for parents who want to leave money for their child’s future without triggering state recapture. |
| Who Can Establish It? | Parent, grandparent, legal guardian, the individual themselves (if capacity exists), or a court. | Anyone with assets to contributeโtypically a parent or grandparent creating it as part of their will. |
| Age Restrictions | Must be under age 65 when trust is established (with exception for pooled trusts over age 65). | No age limit. Can establish for beneficiary of any age (child, adult, or senior). |
| Revocability | Irrevocable. Cannot be changed or terminated once established (required by law under OBRA 1993). | Can be revocable or irrevocable depending on how grantor establishes it (more flexibility). |
| Tax Treatment | Can be established as grantor trust (beneficiary responsible for income taxes, simpler tax reporting). | Usually non-grantor trust (trust files its own Form 1041, may owe higher trust tax rates). |
| What Happens to Remaining Assets After Beneficiary’s Death | State Medicaid agency takes first claim for all benefits paid. After repayment, remainder goes to other beneficiaries (if any). | All assets pass directly to named beneficiaries (siblings, other children, charities) with NO state claim. |
| Typical Dollar Amount / Use Scenario | Lump sums: $25,000โ$500,000+ (settlements, inheritance above $2,000 SSI limit). | Any amount: $10,000 (modest parent savings) to $1M+ (family wealth transfer). |
| Key Advantage | Emergency solution: Only way to preserve benefits if beneficiary unexpectedly receives windfall (settlement, inheritance). | Wealth preservation: No Medicaid payback = remaining assets pass to other heirs (maximize family legacy). |
The best strategy for most families? Use a third-party SNT for parent-funded ongoing support (no payback risk), and if your child unexpectedly receives a large settlement or inheritance, convert that windfall into a first-party SNT to preserve SSI/Medicaidโthis two-trust approach maximizes benefit protection and wealth transfer simultaneously. Consult with a Special Needs Planning attorney in your state to structure both trusts correctly before life-changing events occur.
โก Bottom Line: If you are a parent or grandparent setting up a trust for a loved one, you almost always want a Third-Party SNT. This structure eliminates the state’s claim on the money after your loved one is gone.
โ ๏ธ Myth Busted: “A First-Party SNT is Just Like a Third-Party SNT”
Wrong. A first-party SNT triggers Medicaid payback upon death; a third-party does not. This distinction can cost your family $200Kโ$500K+ in lost inheritance. A family’s mistake: creating a first-party SNT for a $150K settlement thinking it’s the same as parent-funded trust. At death, the state claims $145K of remaining assets for Medicaid reimbursement. Other siblings get nothing. Plan differently: use first-party only when you HAVE to (windfall received); use third-party for parent estate planning.
๐ก Avoid the $1.4M SNT Mistake & Protect Your Child’s Future
One critical financial move each week โ straight from 30 years of seeing what goes wrong with trusts.
- โ State-specific SNT compliance strategies (avoid $72K/year benefit loss)
- โ Tax moves that preserve wealth across generations
- โ ISM calculations and Medicaid payback scenarios explained clearly
Critical SNT Rules: Housing, Rent, and the Dreaded ISM Calculation
“Can the trust pay for my child’s rent?” This is the most commonโand most dangerousโquestion I get.
Yes, it can. But it triggers a rule called In-Kind Support and Maintenance (ISM), and 99% of online articles get the details wrong, which could needlessly cost you benefits.
You might be wondering: “If the trust pays for housing, won’t my child’s SSI check be reduced?”
The answer: Only if the payment is large enough, and most of the time, it isn’t.
The Social Security Administration has a rule that reduces SSI benefits if a person receives “in-kind” help for food or shelter. However, there is a federal exclusion that most people don’t know about. While the exact amount is adjusted for inflation, it’s substantial. This means a trust can often pay for a modest apartment without triggering any SSI reduction at all. [Social Security Administration, Understanding In-Kind Support and Maintenance].
๐ Quick Stat: The $1,885 Exclusion (2024)
An SNT can pay up to $1,885/month for housing before triggering any SSI reduction. Most families pay $600โ$1,000/month rentโwell below the threshold. Bottom line: careful SNT planning often means ZERO SSI reduction, not the dollar-for-dollar cut online articles claim. That could mean preserving $12Kโ$15K/year in SSI benefits.
Real Numbers Example:
Let’s say the maximum federal SSI payment is $967 per month in 2026.
- Scenario 1: SNT pays $800/month for rent.
- Because this amount is below the federal ISM exclusion threshold, it doesย NOTย reduce the beneficiary’s SSI check. They still receive their full $967.
- Scenario 2: SNT pays $2,500/month for rent.
- This amount is over the exclusion threshold. The portion above the limit is counted as income, which then reduces the SSI check, but often not dollar-for-dollar.
โก Bottom Line: Do not assume that any payment for housing will automatically slash benefits. With careful planning, an SNT can absolutely help with housing costs without jeopardizing the beneficiary’s primary income source.
SNT vs. ABLE Account: Which Tool is Right for You?
The ABLE account is another powerful tool, but it serves a different purpose than an SNT. Choosing the right oneโor using them togetherโis a key strategic decision.
Understanding the key differences between Special Needs Trusts (SNTs) and ABLE accounts is essential when planning for a loved one with disabilities. While both tools protect government benefits eligibility, they differ significantly in asset limits, control mechanisms, and long-term planning capabilities. The right choice depends on the amount of assets involved, who will manage the funds, and whether you’re planning for a major inheritance or everyday expenses.
| Factor | Special Needs Trust (SNT) | ABLE Account |
|---|---|---|
| Best For | Holding significant assets (e.g., >$100,000, inheritances, real estate). | Everyday spending and savings for individuals whose disability began before age 26. |
| Asset Limit | Unlimited (no caps on holdings). | Account balance varies by state (often $300k+). Annual contributions: $19,000/year (2025). |
| Control | Trustee has full control and manages all distributions. | Beneficiary can have direct control over the funds (age 26+ with disability). |
| Medicaid Payback | Yes for First-Party; No for Third-Party. | Yes, but only for Medicaid expenses paid after the account was opened. |
| Setup Cost | High: Attorney fees $2,000โ$6,000+ (ongoing annual administration $1,200โ$2,400). | Low to None: Setup takes minutes online; no attorney needed. |
| Tax Treatment | Trust earnings taxed at trust rates. First-party: potentially grantor trust (tax-neutral for beneficiary). | Tax-free growth and withdrawals for qualified disability expenses (QDEs). |
| SSI Impact (Over Limit) | No impact: Assets fully protected; SSI never reduced. | $100,000+ reduces SSI: Balances over $100k reduce monthly SSI by $1 per $1 excess. |
For families with large inheritances or complex planning needs, an SNT remains the superior choice; for individuals seeking autonomy and tax-free savings for everyday expenses, an ABLE account offers simplicity and control. The best strategy? Many families use both togetherโallowing the SNT to hold major assets while the ABLE account manages day-to-day spending with beneficiary independence.
๐ง Michael’s Take: Why “Both Together” Wins
Best families don’t choose SNT OR ABLEโthey use both. SNT holds the $200K inheritance (unlimited assets, protected). Each year, trustee distributes $19K to beneficiary’s ABLE account (2025 limit) for spending independence. Result: Large assets stay protected; beneficiary has agency; benefits stay intact. This is the professional strategy most DIY planners miss.
The Professional Strategy:
Use them together. The SNT can hold the large family inheritance (unlimited assets, protected by the trustee), and each year, the trustee can make a distribution from the SNT to fund the beneficiary’s ABLE account for their yearly spending needs. This gives the beneficiary independence while keeping the bulk of the assets protected.
๐ Key Takeaway: The SNT Question You Must Answer First
Before diving into trust mechanics or tax filing, ask: “Is this first-party or third-party?” That one answer determines everythingโMedicaid payback rules, revocability, tax treatment, and long-term planning. Get this wrong, and nothing else matters.
Frequent Reader Questions About Special Needs Trusts (SNT)
How Is a Special Needs Trust Taxed?ย Are Special Needs Trusts Taxable?
Do special needs trusts pay taxes? Special Needs Trusts are taxed differently depending on the type of trust and the source of the funds.
> A Third-Party Special Needs Trust is not taxed on the income generated by the trust assets, as long as the income is used solely for the benefit of the beneficiary.
> A First-Party Special Needs Trust is subject to income tax on the income generated by the trust assets, but it may be able to take advantage of certain tax deductions and exemptions.
> A Pooled Special Needs Trust may be subject to income tax, but the tax liability is usually shared among the beneficiaries in proportion to their share of the trust assets.
* It is important to consult with a qualified tax professional who is familiar with the tax laws and regulations governing Special Needs Trusts to ensure compliance with the tax requirements and to optimize the tax benefits for the beneficiary.
Does a Special Needs Trust Need a Tax ID Number?ย
Does a special needs trust need an EIN? Yes, a Special Needs Trust (SNT) needs a Tax ID Number or Employer Identification Number (EIN) in order to file taxes and open a bank account.
> An EIN is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to identify a business entity, including trusts.
> The trustee of the SNT can apply for an EIN online on the IRS website or by mail by filling out Form SS-4.
> When applying for an EIN, the trustee will need to provide information about the SNT, such as the name, type of trust, and date of creation.
> It is important to note that a Special Needs Trust may have to file taxes if it has income that exceeds certain thresholds, even though it is tax-exempt in most cases.
> The trustee should consult with a tax professional to determine whether the SNT needs to file taxes and to ensure compliance with tax laws and regulations.
* Remember, these are just general guidelines and each case may have unique circumstances that need to be addressed. It is always best to consult with an experienced attorney or tax professional to ensure proper handling of a Special Needs Trust.
Can a Special Needs Trust Pay For Property Taxes?
Yes, a Special Needs Trust may be able to pay for property taxes on a home or other property owned by the beneficiary. This may depend on the terms of the trust document and the laws of the state where the property is located.
– Generally, a Special Needs Trust is set up to provide for the beneficiary’s supplemental needs and maintain eligibility for government benefits such as Medicaid.
– Property taxes may be considered a necessary expense for maintaining the beneficiary’s home, which is a primary residence and exempt asset for Medicaid purposes.
* It is important to consult with an experienced attorney who can help you understand the rules and limitations of using a Special Needs Trust to pay for property taxes.
Can a Special Needs Trust pay For utilities?
Yes, a Special Needs Trust can pay for utilities as long as it is done in a way that does not interfere with the beneficiary’s eligibility for government benefits. Utility payments can be considered allowable expenses if they are considered reasonable and necessary for the beneficiary’s health, safety, and welfare.
– However, it is important to note that the rules regarding what expenses are allowable may vary depending on the type of trust and the terms of the trust document.
– Therefore, it is always a good idea to consult with an experienced attorney who can provide guidance on how to manage the trust funds in a way that complies with the applicable laws and regulations.
Can a Special Needs Trust Pay For housing?
Yes, a special needs trust can pay for housing expenses for the beneficiary as long as it is done in a way that complies with the rules and regulations of the trust and relevant government programs such as Medicaid. Some possible housing expenses that a special needs trust may cover include:
> Rent or mortgage payments for a home or apartment that the beneficiary lives in
> Property taxes and insurance for the home
> Maintenance and repairs for the home, such as plumbing, electrical, or structural repairs
> Home modifications that are necessary for the beneficiary’s safety and well-being, such as wheelchair ramps or accessible bathroom fixtures
* It is important to note that the trustee of the special needs trust must carefully consider the rules and limitations of the trust and government programs, and work with an attorney and financial advisor to make sure that the payments are made in a way that maximizes the benefits for the beneficiary while avoiding any penalties or disqualifications from government programs.
Can a Special Needs Trust Contribute to an Able Account?
Can a special needs trust fund an ABLE account? An ABLE account is a tax-advantaged savings account for individuals with disabilities, and it is designed to work in conjunction with public benefits, such as Medicaid and Supplemental Security Income (SSI).
> Contributions to an ABLE account must be made in cash, so if the special needs trust holds assets that are not cash (e.g., real estate, stocks, or mutual funds), those assets would need to be sold or liquidated first to generate cash for the contribution to the ABLE account.
> If the special needs trust is a first-party trust (funded with the beneficiary’s assets), there are restrictions on the amount that can be contributed to the ABLE account. The annual contribution limit for a first-party special needs trust is the annual gift tax exclusion amount (currently $15,000), minus any other gifts made to the beneficiary during the year.
> If the special needs trust is a third-party trust (funded with someone else’s assets), there are no restrictions on the amount that can be contributed to the ABLE account, as long as the trust document allows for it and the contribution does not violate the trust’s terms or the beneficiary’s eligibility for public benefits.
> It is important to consult with an experienced attorney who can help you understand how a special needs trust can contribute to an ABLE account and how to plan accordingly.
Can a Special Needs Trust Purchase Life Insurance?
Yes, a special needs trust can purchase life insurance on behalf of the trust beneficiary, but there are some important considerations to keep in mind.
> The life insurance policy must be owned by the trust, not the beneficiary or anyone else.
> The trust must be named as the beneficiary of the life insurance policy, and the beneficiary should not be named as a direct beneficiary.
> The trustee of the special needs trust must manage the life insurance policy and ensure that it does not disqualify the beneficiary from receiving government benefits.
> Depending on the type of special needs trust and the terms of the policy, the life insurance proceeds may be subject to Medicaid payback or estate recovery after the beneficiary’s death.
> It is important to consult with an experienced attorney and financial planner who can help you navigate the complexities of purchasing life insurance for a special needs trust and ensure that it aligns with your overall estate planning goals.
How Do I Setup a Special Needs Trust?
How To Draft a Special Needs Trust?
Identify the type of trust that meets your needs. There are different types of Special Needs Trusts, such as first-party, third-party, and pooled trusts, each with their own requirements and advantages. Consult with an experienced attorney who can help you understand which type of trust may be appropriate for your situation.
Choose the trustee and successor trustees. The trustee is the person or institution responsible for managing the trust assets and making distributions to the beneficiary according to the terms of the trust. It is important to choose a trustee who has experience and knowledge in managing special needs trusts and who can act in the best interest of the beneficiary. It is also advisable to name one or more successor trustees in case the original trustee becomes unable or unwilling to serve.
Draft the trust document. The trust document is the legal agreement that sets out the terms and conditions of the trust, including the identity of the trustee, the beneficiary, the purpose of the trust, the rules for making distributions, and the contingencies for termination or modification of the trust. The trust document should be drafted by an attorney who is knowledgeable about special needs trusts and who can customize it to fit your specific needs and goals.
Fund the trust. Once the trust document is drafted and signed, it is important to fund the trust with assets that will be used to provide for the beneficiary’s needs. The assets can be contributed by the grantor (the person who creates and funds the trust), transferred from an existing trust, or inherited by the beneficiary. It is important to ensure that the assets are titled in the name of the trust and that the trustee has the legal authority to manage them.
Manage the trust. After the trust is funded, the trustee is responsible for managing the assets, making distributions to the beneficiary, and filing tax returns and accountings as required by law. It is important to monitor the trust regularly and review its terms and performance periodically to ensure that it continues to meet the beneficiary’s needs and objectives.
Do It Yourself Special Needs Trust Forms
It is not recommended to use Do-It-Yourself (DIY) forms for setting up a special needs trust. Special needs trusts are complex legal documents that require careful consideration of many factors, such as the beneficiary’s needs, the source of the funds, the type of trust, the tax implications, and the state and federal laws governing trusts and public benefits. A DIY form may not take into account all of these factors, and may not be tailored to the specific needs of the beneficiary and the grantor.
Instead, it is highly recommended to seek the assistance of an experienced attorney who specializes in special needs planning. The attorney can help draft a special needs trust that meets the unique needs of the beneficiary and complies with all the legal requirements. The attorney can also provide guidance on funding the trust, managing the trust assets, and ensuring that the trust does not affect the beneficiary’s eligibility for public benefits.
There are some resources available online that can provide general information about special needs trusts and special needs planning. Some examples are:
The Special Needs Alliance: a national organization of attorneys who specialize in special needs planning, provides information and resources on their website, including a directory of member attorneys by state.
The National Disability Institute: a non-profit organization that promotes financial stability and economic empowerment for people with disabilities, provides information and resources on their website, including a guide on special needs trusts and a list of resources by state.
The Arc: a national organization that advocates for the rights and inclusion of people with intellectual and developmental disabilities, provides information and resources on their website, including a guide on special needs trusts and a directory of local chapters.
Create a Free Special Needs Trust Through Rocket Lawyer
*Remember, it is always best to seek the advice and assistance of an experienced attorney who can provide legal guidance tailored to your specific situation.
How To File Taxes For a Special Needs Trust?
Here are some key points to consider when filing taxes for a special needs trust:
Type of trust. The type of special needs trust you have will determine how it is taxed. First-party special needs trusts are generally considered grantor trusts, which means that the beneficiary is responsible for reporting the income and paying the taxes. Third-party special needs trusts are separate taxable entities, which means that the trust itself is responsible for reporting the income and paying the taxes.
Taxable income. The taxable income of the trust includes any interest, dividends, capital gains, rental income, or other income earned by the trust during the tax year. This income must be reported on Form 1041, which is the tax return for estates and trusts.
Deductions. The trust may be able to deduct certain expenses, such as trustee fees, attorney fees, and accounting fees. These deductions can help reduce the trust’s taxable income.
Tax rates. The tax rates for trusts are different from the tax rates for individuals.
Tax return due date. The tax return for a special needs trust is due on April 15th, unless an extension is requested. If the trust receives income of $600 or more during the year, it will also need to issue a Form 1099 to each beneficiary who received a distribution from the trust.
* It is important to consult with a tax professional or an attorney who is knowledgeable in special needs trust taxation to ensure that you are complying with all applicable laws and regulations.
How To Find a Trustee For a Special Needs Trust?
Finding the right trustee for a special needs trust is a critical decision, as the trustee will have a significant role in managing the trust and ensuring that the beneficiary’s needs are met.
Some possible ways to find a trustee for a special needs trust include:
1) Asking family members or friends who may be suitable and willing to serve as a trustee. It’s important to consider their financial expertise, availability, and willingness to carry out the duties and responsibilities of a trustee.
2) Consulting with an attorney who specializes in special needs planning. They may have experience working with trustees and be able to recommend someone who is qualified and reliable.
3) Hiring a professional trustee, such as a bank or trust company, that specializes in managing special needs trusts. This option may provide expertise and experience in managing trusts, but it may come at a higher cost.
When selecting a trustee, it’s important to consider factors such as their integrity, financial responsibility, and commitment to the beneficiary’s well-being. It’s also important to have clear communication and documentation of the trustee’s responsibilities and expectations to ensure that the trust is managed appropriately.
If you’ve been asked to be a trustee, it’s a sign of immense trust, but it’s also a significant legal responsibility. Understanding these duties is your first step.
The Trustee’s Playbook: An SNT Operations Checklist
Setting up the trust is step one. Running it correctly is what ensures it works for decades.
โ The SNT First 90 Days Checklist
- [ ] Week 1: Obtain an Employer Identification Number (EIN).ย
The trust is a separate legal entity and requires its own tax ID. This is done via IRS Form SS-4. - [ ] Weeks 2-3: Open a Trust Bank Account.ย
Take the trust document and the EIN to a bank to open a checking or investment account in the name of the trust. - [ ] Weeks 4-6: Fund the Trust.ย
Formally transfer the assets (cash, investments) into the new trust account. This must be documented perfectly. - [ ] Weeks 7-12: Establish a Record-Keeping System.ย
Use a spreadsheet or software to track every dollar in and every dollar out. This is not optional; it’s a legal requirement of the trustee.
๐ Next Steps: Your SNT 90-Day Launch
Week 1: Get EIN (Form SS-4). Weeks 2โ3: Open trust bank account. Weeks 4โ6: Fund the trust (document every transfer). Weeks 7โ12: Set up record-keeping (spreadsheet or software). Miss any of these, and your trust is vulnerable. One family skipped week 1โ3 steps; IRS audited them two years later for improper tax reporting. Ouch.
Unspoken Professional Truth: Most family members who act as trustees fail at record-keeping. They co-mingle funds or make undocumented payments, creating a legal nightmare and putting benefits at risk. If you are not meticulously organized, hire a professional trustee.
Types of Trusts & Benefits Of a Trust in My Estate Plan?
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Note: The content provided in this article is for informational purposes only and should not be considered as financial or legal advice. Consult with a professional advisor or accountant for personalized guidance.
