Special needs trusts


If you are the parent, or guardian, of a special needs child or adult, a special needs trust is an essential estate planning document, as it allows you to provide all the supplemental benefits to your child without compromising his/her eligibility for governmental benefits. In order to qualify for governmental benefits such as Medicaid or SSI, an individual cannot have more than $2,000.00 in assets in his/her name in any given month. A special needs trust allows for planning ahead and effectively saving money for your child’s future, without compromising his/her government benefits. A special needs trust may be funded when created or may be funded upon your death by a life insurance policy or other investment.

The intention of a special needs trust is to supplement, and not supplant or replace government benefits. It is not designed to provide things such as food, shelter, and clothing, but rather to allow you to continue to provide the “extras” for your child, without harming his/her eligibility for health insurance and other valuable government programs. These “extras” include all things that have a “reasonable relationship” to your child’s needs, and may include things such as summer camps, vacations, adaptive equipment, and other things that will enhance the quality of your child’s life.

If your child has a special needs trust, it is very important that all assets, gifts, and other income the child receives go into the trust, not to the child individually. It is important to tell other family members and close friends who may be making gifts to your child about this trust, so that they do not accidentally disqualify your child for his/her governmental benefits. Also, be sure to discuss this with grandparents, who may have named your child in their wills; this well-intentioned gift may end up disqualifying your child. Instead, let these family members know that they may make gifts to the trust, or may name the trust as a beneficiary, so as to preserve your child’s benefits.

As a cautionary note, if you wish to establish a special needs trust for your child, please consult an attorney who specializes in special needs estate planning, as this is a highly specialized form of a trust. In order to meet the regulations and requirements established by the federal government to qualify as a special needs trust, there are specific statutory language and provisions that must appear in your trust documents. Simply labeling a trust “special needs trust” is insufficient, and may have a very adverse impact on your child’s eligibility for health insurance and other essential government programs.

For more information regarding the Social Security Administration regulations visit https://secure.ssa.gov/apps10/.


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