Third Party Trusts

Third Party Trusts can be more easily adapted to the needs and wants of the person creating the trust and can therefore be part of a more traditional estate plan. They can be revocable or irrevocable, and most significantly, do not require any “payback provisions.”

There are two general requirements for transforming a more traditional trust into a Third Party special needs trust. First, these trusts must be established by someone other than the trust beneficiary. Third Party Trusts are usually established by parents of adult children, grandparents, aunts, uncles, siblings, friends, or any other independent party with no legal duty to support the trust beneficiary. A spouse cannot be considered a third party. The second key requirement is that these trusts must be established with funds in which the beneficiary has no ownership interest.