What is a self-settled trust?
A self-settled trust is a type of trust that is created by an individual and funded with their own assets. This type of trust is used most often to protect those assets from the reach of creditors and to provide for a disabled individual’s future medical and living needs. This type of trust is allowed in Washington and is known as a Qualified Disability Trust, or QDT. To create a self-settled trust, an individual (known as the grantor) transfers assets to a trustee with the intention of preserving or protecting those assets. The trustee then holds and manages the assets to be used for a certain purpose, such as providing medical care, housing, and/or other needs of the grantor during their lifetime. The assets are kept separate from other assets owned by the grantor and are not subject to claims from creditors or the court. Washington’s disability planning laws ensure that self-settle trusts are not subject to Medicaid’s “look-back” rules, which require the assets in the trust to be returned to pay for medical care. This type of trust allows individuals with a disability to protect their assets and retain eligibility for benefits like Medicaid and SSI. Self-settled trusts can be an important part of disability planning in Washington. They allow individuals to retain their assets while still being eligible for important benefits. With careful planning and legal advice, individuals with disabilities can create a self-settled trust that meets their needs and protects their assets.
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