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Special Needs Trusts: First-Party and Third-Party Reporting; Distribution Requirements

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, February 2, 2022

Recorded event now available

This webinar will explain first-party and third-party special needs trusts (SNTs) for tax practitioners working with these trusts or working with clients who may benefit from an SNT. Our panel of seasoned trust experts will discuss the unique tax reporting obligations and planning considerations for SNTs.

Description

An SNT could be the entity that best fulfills the primary purpose of a trust, one person holding assets for the benefit of another. At the same time, its fiduciary and reporting responsibilities are among the most complex.

SNTs can be third-party or first-party SNTs. The former's income can be taxed at the beneficiary or trust level; the latter is always taxable to the beneficiary, even when there are no distributions. Understanding when to distribute income can provide significant tax savings or needed cash flow for a trust and its beneficiary. Like trusts in general, distributions from SNTs are authorized by the trustee.

First-party trusts are irrevocable and are usually established for the benefit of someone receiving government benefits. A third-party trust can be revocable or irrevocable, and its tax liability paid by parents or other grantors. Tax practitioners working with these trusts or who have clients that could benefit from an SNT need to understand the reporting responsibilities and planning opportunities that come with these trusts.

Listen as our panel of trust and estate experts details how to distinguish first- and third-party trusts, Form 1041 filing options for first-party trusts, coordinating SNTs with ABLE accounts, and distribution considerations for trust and estate advisers recommending and filing returns for SNTs.

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Outline

  1. Special needs trusts: an overview
  2. First-party SNTs
    1. Reporting requirements
    2. Distributions
  3. Third-party SNTs
    1. Reporting requirements
    2. Distributions
  4. Coordinating with ABLE accounts
  5. Best practices

Benefits

The panel will review these and other key issues:

  • Recognizing first- and third-party SNTs
  • Key reporting differences between first- and third-party SNTs
  • 1041 filing options for first-party SNTs
  • Coordinating an ABLE account and an SNT

Faculty

Eble, Deanna
Deanna M. Eble
Partner
Russo Law Group

Ms. Eble focuses on Elder Law, Estate Planning, Special Needs Planning and Medicaid Planning, and has practiced in...  |  Read More

Rubin, Benjamin
Benjamin A. (Benji) Rubin, JD, LLM (Tax)
Partner
Rubin Law

Mr. Rubin focuses his practice on providing legal advice for families of individuals with special needs, including...  |  Read More