If a person living with special needs has a substantial amount of assets, either from inheritance or compensation, they may not be eligible for public benefits like the Supplemental Security Income (SSI) or Medicaid. Fortunately, such individuals can set up special needs trust so they can receive needs-based public benefits while preserving their assets.
A special needs trust (also known as supplemental needs trust) is designed to supplement rather than replace the government support programs provided by SSI and Medicaid. You can use the resources in a special needs trust to pay for anything stipulated in the trust document, such as the basic necessities of life or even luxuries.
Parties in a special needs trust
Just like with any other trust, a special needs trust is designed around three people:
- The grantor (also known as the settlor)
- The beneficiary (the person with special needs)
- The trustee who manages the funds in the trust in favor of the beneficiary
A special needs trust can be set up by parents who have a child with special needs, and it can come into effect upon the parents’ death through a provision in the will.
So is a special needs trust right for you?
Besides preserving your eligibility for support programs, a special needs trust can also be a great tool if you cannot independently manage your finances. Here are some of the reasons why you should consider setting up a special needs trust either for yourself or a loved one:
- Preserve the beneficiary’s rights to government-sponsored support programs while enhancing their life
- Ensure that funds are used for the intended purpose (the care of a beneficiary with special needs).
- Protect assets from creditors and taxation
People with special needs face numerous challenges. A special needs trust can help these individuals access additional funding without forfeiting government benefits.