Final answer:
Pat has created a grantor trust, not a special needs trust. A grantor trust is where the trust's creator retains certain rights or interests, leading them to be taxed as the owner of the property within the trust.
Step-by-step explanation:
Pat created a trust where he transferred property and retained certain interests; for income tax purposes, he was treated as the owner of the trust. This type of arrangement, where the person creating the trust maintains certain rights or interests, is not referred to as a special needs trust, but rather as a grantor trust.
A grantor trust is an estate planning tool in which the grantor retains control or an interest in the trust assets. Income generated by the trust is therefore treated as the grantor's for tax purposes. It's essentially a financial arrangement that allows the individual who creates the trust to have a level of control or benefit from the assets within the trust while they are still living. This is distinct from a special needs trust, which is designed to provide financial support to a beneficiary who has a disability, without compromising their eligibility for government benefits.