When planning your estate, you want the best plan for your child with a disability. A special needs trust (SNT) helps secure their future without affecting their eligibility for government benefits.
When your child has a disability or impairment such as blindness, they may be eligible for government benefits like the Supplemental Security Income (SSI) or Medicaid, but these benefits are often means-tested and could be jeopardized by direct inheritance.
An SNT can help protect your child’s benefits
When you establish a well-formed special needs trust (SNT), it protects your child’s benefits in several important ways:
- Excludes assets from personal ownership: In a well-structured SNT, the trust assets are owned and managed by a trustee rather than your child. This is important because it helps ensure that these assets are not counted when determining your child’s eligibility for essential means-tested benefits like SSI and Medicaid.
- Covers supplemental needs: An SNT is designed to supplement, not replace, government benefits. It allows for the provision of services and items that are not covered by programs like SSI and Medicaid, such as specialized medical care, educational opportunities, therapeutic services and even recreational activities. This enhances your child’s quality of life by providing for their unique needs without risking the loss of their benefits.
- Prevents disqualification from benefits: A key feature of an SNT is that the beneficiary, your child, does not receive direct disbursements from the trust. Instead, the trustee uses their discretion to make payments directly to service providers or for specific needs. This structure is designed so that your child’s income and assets remain below the thresholds that could disqualify them from receiving government benefits, thus safeguarding their long-term financial security.
- Offers long-term security: A well-formed SNT provides a robust, long-term plan for your child’s financial well-being. It helps ensure that your child will continue to receive the necessary resources throughout their lifetime, even after you are no longer able to provide for them directly.
When setting up a special needs trust, considering legal guidance can help ensure the trust is properly structured to meet your child’s needs and comply with regulations.