Would a Special Needs Trust Be a Good Solution for You and Your Loved One?

Getting through life with a serious physical or mental disability can be extremely challenging. Not only are the daily tasks of life more difficult, but finding a steady source of income and medical care can feel overwhelming. While the federal government offers such support programs as Supplemental Security Income (SSI) and Medicare, the income caps on these programs are so restrictive that it can be hard to survive on government support alone. If you’re a friend or relative of someone with a disability and want to provide them with financial assistance, you may want to consider creating a special needs trust.

Generally, disabled individuals who receive a form of government support such as SSI or Medicaid will no longer be eligible to receive this support if they have over $1000 in cash. Thus, someone who wishes to support a person with a disability could harm that person’s access to ongoing funding and medical care by providing large cash gifts.

Creating a special needs trust provides an avenue of support that will not threaten those benefits. Funds from the trust, as managed and allocated by a responsible trustee of your choosing, can be spent on a wide variety of expenses on the beneficiary’s behalf. The trust funds can be used on a house or car for the beneficiary, as well as in-home care costs, furniture, appliances, or even vacations. Under certain circumstances, funds may even be used on vocational training or education.

Special needs trusts are not permitted to transfer so-called “countable resources” to a beneficiary. These include stocks, bonds, savings or checking accounts, investment accounts, retirement assets, or real estate other than something the beneficiary uses as a primary residence. Also keep in mind that, when the trust is dissolved, the trust may need to return funds which the beneficiary received through government assistance while also benefitting from the trust. An attorney can help answer questions you may have about whether a trust is a good solution for you and your loved one.