If you have a family member with disabilities who is dependent on ‘needs based assistance’, such as Medicaid, Supplemental Security Income from Social Security (“SSI”), housing assistance, or vocational assistance, a properly drafted Special needs Trust can be used to provide him or her with ‘extras’ beyond the basic needs provided by those public benefits. Such a Special Needs Trust must be carefully drafted and administered in order to avoid disqualifying the individual from receiving those benefits.
A Special Needs Trust can be a stand-alone document, created solely to provide benefits for the disabled individual, or part of a Will. The Special Needs Trust permits the disabled individual to receive a bequest that will not interfere with his or her ability to continue to receive the funding needed for his or her day to day living. A Special Needs Trust does not replace government benefits and cannot provide discretionary income to the disabled individual.
However, a Special Needs Trust can be used to provide the disabled individual with items that will make his or her life more comfortable, such as a computer, musical instruments and entertainment devices. A Trustee will be appointed to manage the Trust, and decide what expenditures are appropriate, according to the terms of the Trust.
A Special Needs Trust can only be established for an individual who is less than 65 years of age. There are different types of Special Needs Trusts and different rules depending on the source of the funds used to create the Special Needs Trust. Certain types of Special Needs Trusts must include a provision that Medicaid will be repaid upon the death of the disabled individual. It is important to work with an attorney who understands the different types of Special Needs Trust and the structure of public benefits.