Special Needs Trusts


If you have a spouse, child, sibling, parent, or other loved one, who is physically, mentally or developmentally disabled—from birth, illness, injury or drug abuse they may be entitled to government benefits (Supplemental Security Income and/or Medicaid) now or in the future. However, most of these benefits are available only to those with very minimal assets.

Like many others, you may find yourself faced with a difficult choice. If you leave a substantial inheritance to this person, they will be disqualified from receiving the government benefits which may be crucial for their care. On the other hand, you may not want to have to disinherit this person in order to preserve these benefits.

There is a third option. With a Special Needs Trust you can provide for a disabled child or other loved one, without interfering with their benefits.

The Special Needs Trust must be very specific in stating that its purpose is to supplement government benefits—that is, to provide only benefits or luxuries above and beyond the benefits the beneficiary (the disabled person) receives from any local, state, federal, or private agencies.

It is extremely important that the Special Needs Trust not duplicate any government provided services and that the beneficiary does not have any resemblance of ownership of the trust assets. Otherwise, it is very possible that the government would attempt to seize the trust assets for repayment of services provided or determine that the beneficiary does not qualify for future benefits because they have ample assets and income to provide for adequate care.

To make sure the beneficiary does not have any implied ownership in the trust assets, the Special Needs Trust must give the trustee complete control over the distribution of the assets and any income they generate. The beneficiary should not be able to demand any principal or interest from the trust.

As you can see, providing for someone with special needs takes more thought and is more complicated than providing for your other beneficiaries.