What is a Special Needs Trust?

A special needs trust permits a grantor, or the person establishing and funding the trust, to provide for the needs of a disabled person without having any adverse effects on government benefits that the disable person is likely to be receiving.  Federal benefits programs for disabled persons such as Supplemental Social Security (“SSI”) and Medicaid disability are income and asset-based programs. 

Effect on Disability Benefits

Those disabled persons who receive income or possess assets in excess of the financial qualification guidelines for these programs will lose their benefits.  However, income or assets that disabled persons receive from a special needs trust will not disqualify them from these federal benefits programs.  Essentially, if you leave a disabled adult child your entire estate upon your death, the assets and/or income that he or she will receive from your estate are likely to disqualify him or her from receiving Medicaid and/or SSI benefits. 

Nonetheless, if you leave your estate to a special needs trust, which is governed by your designated trustee who is in charge of managing, investing, and distributing assets to the disabled beneficiary, the assets or income from the special needs trust will not qualify as countable resources for the purposes of determining Medicaid and/or SSI eligibility.  Therefore, the disabled beneficiary will still receive benefits of these federal programs, but also will have access to additional funds that may be used for virtually anything to better the beneficiary’s life, such as better housing, out-of-pocket medical expenses and prescriptions, services that Medicaid does not cover, and/or a personal caregiver to provide assistance to the beneficiary as needed.

Getting Help with a Special Needs Trust

As a special needs trust is an extremely specialized type of trust that must meet specific requirements in order to be valid, and to avoid having a negative effect on your beneficiary’s public benefits, you will need to contact an estate planning attorney who can ensure that your special needs trust will fulfill all of your intended beneficiary’s needs.