What is a Special Needs Trust?
What is a special needs trust? This is a common type of trust with a very important purpose, and it’s one that you’ll want to understand fully if you have a loved one who would benefit from this level of support.
What is a Special Needs Trust?
A special needs trust (sometimes referred to as a supplemental needs trust) is a legal document that provides designated money or property to a loved one with a disability. It also designates a trustee, which is a person or entity who is responsible for overseeing the care of the recipient of the trust and managing their assets.
The biggest benefit of a special needs trust is that it provides supplemental support without interfering with an individual’s eligibility for public assistance programs like Supplemental Security Income (SSI) and Medicaid—both of which have strict income and asset requirements. Instead, an individual who is physically or mentally disabled can redeem both the benefits of the public assistance programs and the assets of the trust, which can make a big difference in their overall quality of life.
Understanding the Purpose of Special Needs Trust Provisions
There are three primary functions of a special needs trust:
To supply a disabled individual with property and/or supplemental income
To provide financial support without disqualifying a disabled individual from public assistance programs
To assign a person or entity to serve as trustee and oversee management and distribution of trust assets
This legal arrangement benefits the person who establishes the trust as well, ensuring that their loved one will be cared and provided for even when they are not able to take a direct role. In this way, a special needs trust is one of the most beneficial trust arrangements for people with disabilities and their families, and can help provide for additional life-enhancing services, including therapies, medical assistance devices, care facilities, transportation costs, and anything else needed to sustain an individual’s standard of living.
How Does a Special Needs Trust Work?
A special needs trust can be set up as a stand alone trust, or can be set up during the will or trust establishment process with the help of a specialized attorney. In laying out the terms of the trust, the establishing party will also designate a trustee. This person or entity will play a crucial role in trust oversight and disbursement. Notably, this type of trust doesn’t just ensure a disabled individual’s care for the long-term—it also helps protect their assets from creditors or legal challenges. Any funds disbursed through the trust are not liable for seizure, just as they do not count toward income caps for Medicaid, SSI, and other federal programs.
Set Up a Special Needs Trust for a Dependent Loved One
Our team at CWH Law has personal experience and more than ten years of expertise in helping families set up supplemental needs trusts, and can help you take action to protect your loved one both now and in the years to come.
Please contact us today to learn more about our trust services and make sure that discretionary funds are set aside and available for your family member’s care.