- October 5, 2022
How Is A Special Needs Trust Taxed In Arizona?
Special needs trusts can be a way to protect your child's future. A special needs trust can provide financial stability and help ensure that your child has the resources they need to live their best life.
A trust can be a great way to protect your special needs child's assets and rights. You can navigate to https://elderlawofaz.com/special-needs-planning/ to discover more about special needs trust in Arizona.
Here are some tax considerations to keep in mind when setting up a trust for your special needs child.
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Right type of trust: A special needs trust is a type of trust used to protect the assets and rights of someone with a disability. There are three main types of trusts: grantor, joint grantor, and survivor.
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Right beneficiary: The beneficiaries of a special needs trust can be individuals, organizations, or both. It's important to choose beneficiaries who will protect your child's interests and who have the resources to do so.
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Trust validation: To be effective, a special needs trust must meet all the requirements of the applicable state law.
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Consider estate taxes: A special needs trust is not a grantor trust. If the settlor dies with an interest in the trust, the surviving beneficiaries must file their own tax returns and pay any federal or state estate taxes on their shares of the trust's value; they will not be able to take credit for those taxes as a charitable deduction on their federal income tax returns.
When it comes to protecting your special needs child, you have a few different options available to you. So if you are considering creating such a trust, be sure to talk with an attorney who can help you weigh all the pros appropriately.
