A special needs trust, which may also be called a supplemental needs trust, is a trust that allows any disabled beneficiary to use property held in the trust without affecting their government-awarded benefits.
As the parent of someone with special needs, you know how important it is for them to receive monthly benefits. Those benefits provide them with an income and medical care, among other services. If they no longer qualify due to their wealth, they’ll have to qualify again in the future and will pay out-of-pocket fees for their needs until they run out of money.
A special needs trust protects your disabled loved one
A special needs trust protects your loved one by making sure that they receive the benefits of the assets you want to leave behind for them but also don’t affect their government benefits. When funds are in a special needs trust, they are seen as belonging to the trust, not to the beneficiary. The trustee controls the funds and assets in the trust, but your loved one will benefit from the payouts when they occur.
The biggest benefit of a special needs trust is that your loved one will be able to keep government assistance such as Medicaid, vocational rehabilitation, Supplemental Security Income, subsidized housing and more. You might think that leaving your loved one funds in any way will help, but if their income is too high or they have a highly valued estate themselves, they will no longer qualify for these benefits.
Don’t cause your loved one to become disqualified for the assistance they need. Instead, place funds or assets into the special needs trust. You can use it to set up inheritance funds or to pay out proceeds from a settlement.
The beneficiary can’t directly access the special needs trust, or it could disqualify them for the government funds they need. Instead, the trustee can buy the things they need for them, like vacations, vehicles, recreational activities and more.
Even if you’re not worried about government benefits, it’s a good idea to talk to your attorney about adding a special needs account to your estate plan. Having one could be extremely beneficial to any disabled loved one you’re leaving behind, even if government benefits aren’t a concern of your own right now. Your attorney can talk to you more about the benefits they provide and how they’ll protect your loved one’s interests.