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Sole Benefit Trusts

Estate Planning Lawyers Protecting the Interests of Nashville Residents

Trusts can be set up for various reasons, and they are an integral part of estate planning to protect certain assets during your lifetime, as well as upon your passing. Generally, third-party trusts are established in order to provide benefits to another person, usually a child or grandchild, who is disabled and unable to care fully for themselves. Sole benefit trusts are a type of third-party trust that provides benefits for both the disabled beneficiary and the executor of the trust. Understanding your options when deciding which kind of trust is right for you can be confusing. The Nashville estate planning attorneys at Martin Heller Potempa & Sheppard, PLLC take the time to inform clients of their choices and the benefits and drawbacks of each of them so that the proper estate plan can be put in place to protect their futures.

Our firm offers individualized, high-quality legal representation and guidance to Tennessee residents who need help making sure that their best interests, and those of their families, are served during not only their lifetimes but afterwards as well. If you would like to learn more about your estate planning options and how we can assist you in the process, contact our office today to speak with a knowledgeable trusts and estates attorney.

Sole Benefit Trusts

Trusts are created by grantors, or trustmakers, whose assets, either money or property, are used to fund the trust. The Tennessee Uniform Trust Code governs what is necessary to establish a valid trust, as well as certain terms necessary for its validity. A trust declaration is an instrument that contains stipulations regarding who the beneficiaries will be, who will act as the trustee to oversee the trust, and other vital terms. Trustees are in charge of managing a trust's investments, as well as making distributions and overseeing the trust's assets. Special needs trusts, specifically, are established in order to protect certain assets from interfering with the named beneficiary's qualification for governmental benefits, such as Medicaid (or TennCare) and Social Security Supplemental Income (SSI). The property placed in a special needs trust does not count toward a beneficiary's income, and therefore that beneficiary is still able to rely on the government assistance necessary for his or her care.

Third-party trusts, as opposed to self-settled or first-party trusts, are created by another person from the named beneficiary to provide aid to a disabled beneficiary either during the grantor's lifetime or afterwards. A sole benefit trust is a kind of third-party trust, which benefits not only the special needs beneficiary but the third-party grantor as well. The grantor is usually also relying on qualifying for governmental benefits like Medicaid/TennCare him or herself, while having a disabled child or grandchild who needs assistance as well. Sole benefit trusts are not different from other third-party trusts because they must contain a payback provision, stipulating that when the grantor-beneficiary dies, the assets remaining must be used to pay back into the Medicaid system before distribution to others. If no payback provision is included, there must be a stipulation that this payout will occur during the beneficiary's lifetime. Other third-party trusts do not need to have this payback requirement to be valid.

Seek Advice from a Nashville Attorney for Your Trusts and Estates Needs

Planning for your family's future is one of the biggest decisions that you can make, and making sure that your loved ones can continue to receive benefits from Medicaid or SSI is a large part of preserving that future. The Nashville lawyers at Martin Heller Potempa & Sheppard, PLLC understand the complexities of each trust or will option, and we work with clients to determine which instrument best serves their interests and needs. Our firm offers legal services to clients throughout Williamson and Davidson Counties, including in Franklin, East Nashville, Brentwood, Hermitage, and Hillsboro Village. If you would like more information regarding sole benefit trusts, or about establishing any other kind of estate planning tool, contact our office online or at 615-800-7096 to find out more about your options.