Go Back

What Is A Special Needs Trust?

Planning for a family member with special needs can be overwhelming.  There are many factors to consider when creating an estate plan to protect a family member with special needs.  One tool congress has created under Federal statute is special type of trust for disabled individuals called a special needs trust.

The special needs trust protects disabled individuals who receive means tested government benefits such as SSI and Medicaid.  In general, if a person who is receiving SSI or Medicaid benefits inherits assets from another person, the receipt of those assets disqualify the disabled individual from those government benefits that may be vital to the disabled beneficiaries well-being.  A properly drafted special needs trust, however, allows the disabled beneficiary to receive an inheritance but retain his or her government benefits.

Unfortunately, there are many traps with special needs trust. Special needs trusts must be created for the “sole” benefit of the disabled individual and also have many restrictions regarding distributions. If the trust is drafted or administered improperly, the inherited assets will be counted as a resource of the disabled beneficiary  disqualifying them from their government benefits. 

When used properly, a special needs trust can greatly enhance the life of a disabled beneficiary and offer them protection during his or her lifetime.  Should you have any questions about special needs trusts, please contact our office.