Special Needs Trust
What Is a Special Needs Trust?
A special needs trust is a legal arrangement designed to provide financial support to a person with disabilities while preserving their eligibility for certain government assistance programs. The trust holds assets that can be used for the beneficiary’s benefit without being counted as personal resources.
Special needs trusts are commonly used to support individuals who receive public benefits such as Supplemental Security Income (SSI) or Medicaid.
Why It Matters
Government assistance programs often have strict asset limits. A special needs trust allows families to provide financial resources without jeopardizing access to these programs.
This structure helps ensure long-term financial support for individuals with disabilities.
How a Special Needs Trust Works
Assets are placed into the trust and managed by a trustee. The trustee uses the funds to pay for certain expenses that improve the beneficiary’s quality of life.
These may include:
- medical care not covered by insurance
- education or training
- transportation
- recreation or personal services
The trust must follow specific legal requirements to maintain eligibility for public benefits.
Example
Parents establish a special needs trust to provide funds for their child with disabilities. The trustee uses the trust assets to pay for additional care and services throughout the child’s life.
Special Needs Trust vs Living Trust
- A special needs trust is designed to preserve eligibility for government benefits.
- A living trust is primarily used for estate planning and asset distribution.
FAQs About Special Needs Trusts
Who manages a special needs trust?
A trustee is responsible for managing and distributing funds.
Can family members contribute to the trust?
Yes. Family members may contribute assets depending on the trust structure.
Do trust assets belong to the beneficiary?
No. The trust owns the assets, which helps preserve benefit eligibility.
Related Terms
