Special Needs Trust Planning

Planning for the future of a child or another loved one with a severe disability often requires family members to become well versed in different government benefit programs. When the individual’s disability is expected to prevent them from working or being able to fully support themselves as an adult, these public resources can be of assistance.  However, government benefits seldom cover all necessary expenses and require that, in order to be eligible, recipients have limited funds available to them.  Fortunately, special needs trust provide a way in which families can supplement their loved one’s finances without endangering their essential benefits.

Special Needs Trust

A special needs trust is a legal device which permits funds to be allocated for a person with certain kinds of disabilities.  The trust will be managed by a trustee who will be dispense payment from the trust for the benefit of the beneficiary. An important feature of these trust is that they allow funds and property to be added to the trust for the benefit of the individual without the trust assets being considered for purposes of government benefit eligibility.


The trust needs to include language which states its purpose explicitly, how the benefits of the trust are to be allocated, and the reasons for payment to the beneficiary.  There are numerous rules about how the trust will need to be structured and how funds may be used.  For instance, the trust cannot be used to benefit someone other than the beneficiary or to pay for the beneficiary’s food.  However, the trust payments can be for the beneficiary’s education, recreation, and non-covered medical expenses.

First-Party and Third-Party Trusts

There are two kinds of Special Needs Trusts: First Party or “Self-Funded” and Third-Party.  A first-party trust is funded with the beneficiary’s resources, and a third-party trust is funded with assets which the beneficiary does not own.   An important distinction between these two kinds of special needs trust is that the third-party trust funds do not have to be used to reimburse the government for their services when the beneficiary dies.  First-party trust benefits, on the other hand, can be sought for repayment for government services after the beneficiary dies.

Special Needs Trust can be a valuable tool to have in place to provide for someone with a disability.  In order to create a trust which meets your loved one’s needs, it is important to consult with an experienced estate planning attorney.  Our office has experience helping families plan for the future and can help. Please contact us online or by phone if we may be of assistance.

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