What is a Special Needs Trust?
A special needs trust is a specialized trust that allows the beneficiary, a person with a disability, to use money and other property held in the trust, while at the same time allowing the beneficiary to receive essential, means-tested government benefits.
Why Do I Need One?
People with disabilities are only able to receive government benefits if they stay essentially under the poverty line. SSI limits single recipients to $2,000 in countable resources. Going over this $2,000 cap can result in reduced monthly checks or loss of benefits.
For a person with a disability surviving on these benefits, an inheritance, legal settlement, or GoFundMe fundraiser can jeopardize their benefits and way of life.
Special Needs Trusts are a great option for any person with a disability who needs a safe, legal way to save and spend funds beyond these limits. They can also be a key component of the estate planning process for family members looking for ways to provide for their loved one with a disability once they are no longer able to care for them.
A Special Needs Trust…
- …can be set up by the person with a disability, a.k.a. the Trust beneficiary (First Party Special Needs Trust) or by the family of the beneficiary (Third Party Special Needs Trust). Learn more about different types of Special Needs Trusts here.
- …is the legal “owner” of the funds put into it. This is why funds in the trust do not count as resources that belong to the beneficiary. The trust is overseen by a Trustee to ensure that funds are spent for the beneficiary.
- …can be spent on necessities like rent, food, and caregiving services and other medical expenses, but also on things like vacations, electronics, and clothes.
- …is irrevocable. This means that any funds you put into the trust stay in the trust and cannot be taken out and recombined with other money you have (even if the beneficiary chooses to stop receiving government benefits). It’s important to find an organization and Trustee you really trust. We hope that’s us!