When planning for a loved one with a disability, many people mistakenly believe that a Special Needs Trust (SNT) is only necessary for those already receiving government benefits. However, individuals of all ages and abilities may benefit from having one in place, even if they are currently healthy, employed, or not yet reliant on public assistance. Disabilities and care needs can arise unexpectedly due to accidents, illnesses, or aging. Proactive planning can ensure financial security while preserving future options.

Disclaimer: The information provided is intended for informational purposes only and should not be construed as legal advice.

What Is a Special Needs Trust?

A Special Needs Trust is a legal document that permits people with disabilities to receive financial support without jeopardizing their access to means-tested public benefits like Supplemental Security Income (SSI) and Medicaid. These benefits have strict income and asset limits, so if a person receiving these benefits were also to receive direct inheritances or financial gifts, then they could unintentionally become disqualified from receiving the government assistance they rely upon.

It’s also helpful to understand the difference between Special Needs Trusts and Supplemental Needs Trusts. While the terms are often used interchangeably, some jurisdictions distinguish between them. Generally, a Special Needs Trust is a trust designed for someone with a disability, ensuring that assets do not disqualify them from essential public benefits, while a Supplemental Needs Trust is intended to enhance the beneficiary’s quality of life by covering expenses beyond basic needs. Regardless of the terminology, both trust structures serve the same goal—providing financial support while protecting eligibility for government programs when needed.

Instead of giving assets directly to the individual, an SNT holds and manages the funds on their behalf, meaning the assets are not considered to be owned by the special needs beneficiary. The funds in the SNT are then handled by another person called the Trustee. The Trustee can be a family member, a professional Trustee, or an institution like a bank. They are responsible for determining how the trust funds are used, and they ensure that the trust is only used for the beneficiary’s benefit. The Trustee uses the funds to pay for expenses that enhance the beneficiary’s quality of life, such as:

• Medical treatments not covered by Medicaid
• Assistive technology and mobility devices
• Education and job training
• Travel, entertainment, and hobbies

Who Needs a Special Needs Trust?

💙 Parents Planning for a Child’s Future

If you have a child with special needs, an SNT ensures that they are financially secure when you are no longer there to support them. Many parents mistakenly believe they can leave assets to a trusted sibling or family member to manage on behalf of their child. However, this approach comes with the significant risk that the funds could be taken from the relative through legal means such as divorce or bankruptcy. There is also no legal recourse if the relative uses the funds for other purposes. A properly structured SNT ensures that the funds are legally protected and exclusively used for your child’s benefit.

💙 Adults with Disabilities Managing Unexpected Assets

For adults who acquire disabilities later in life or inherit assets unexpectedly, an SNT can shield those assets from impacting their eligibility for benefits. Whether the individual receives a personal injury settlement, an inheritance, or even lottery winnings, transferring those funds into a first-party (self-settled) Special Needs Trust can help protect their financial future. It’s important to note that a first-party SNT is funded with the beneficiary’s own assets, while a third-party SNT is funded with assets that were generated by someone else.

💙 Seniors with Disabilities Protecting Long-Term Care Options

Seniors with disabilities who rely on Medicaid or other long-term care programs may also benefit from an SNT. A pooled trust, for example, is one type of SNT that allows older adults to set aside assets for supplemental expenses while remaining eligible for Medicaid-funded nursing home or in-home care. There are also ways to leave assets to an elderly loved one in an SNT if they are already receiving Medicaid. This is especially useful for individuals who need additional comforts and services beyond what Medicaid covers.

The Benefits of Setting Up a Special Needs Trust

A Special Needs Trust can offer invaluable benefits for individuals with disabilities and their families. These trusts are designed to provide financial security while preserving eligibility for essential government benefits. By creating a safety net, you empower your loved ones to thrive without the constant worry of navigating complex financial landscapes. Imagine a world where your loved one can enjoy a better quality of life and access resources and services without compromising their benefits. A special needs trust opens doors to opportunities that enhance independence, from medical care to recreational activities, all while safeguarding vital government assistance. Moreover, these trusts ensure that your family’s hard-earned assets are managed wisely, protecting them from being depleted too quickly. It’s not just about money; it’s about providing peace of mind, knowing that your loved one’s future is secure.

Why You Should Plan Now

The earlier you establish a Special Needs Trust, the better. Life is unpredictable, and having a plan in place ensures that your loved one is cared for no matter what happens. This early planning provides a sense of security and peace of mind, knowing that your loved one will have financial support without the risk of losing vital benefits.

At Lambariello Smith & Speed LLC, we help families navigate the complexities of estate planning, ensuring that every trust is tailored to the unique needs of their loved ones. If you have questions about Special Needs Trusts or want to explore your options, contact us today to schedule a consultation.

Your loved one’s future is too important to leave to chance—let’s create a plan that protects them for life.