Caring for a loved one with special needs involves more than daily support. It also means planning for their well-being in the future after you’re gone. A special needs trust (SNT) is a powerful tool that can provide financial security without jeopardizing their eligibility for government benefits like Medicaid or Supplemental Security Income (SSI).
An SNT allows you to set aside money and other assets for your loved one’s care. Unlike leaving them money directly through a will or other kinds of trusts, which could disqualify them from critical benefits, an SNT helps ensure that the funds are used to enhance their quality of life while preserving their eligibility for public assistance.
Remember, government benefits often cover only basic expenses like food, shelter and medical care. An SNT can pay for therapy, education, a personal caregiver, travel and more.
How to set it up
Creating a special needs trust can be a legally complex process. First, you need to decide on the type of SNT. There are two main types:
- First-party SNT (funded by the beneficiary’s own assets, such as a lawsuit settlement or inheritance)
- Third-party SNT (funded with assets from someone else, like a parent or grandparent)
Each has its own rules and benefits, so it’s important to choose wisely.
Next, choose a trustee to manage the funds responsibly. It could be a trusted family member, friend or a professional trustee.
The trust document must also be well drafted to ensure that it complies with legal requirements while protecting your loved one’s benefits. This includes following due process when funding it to avoid ending up with an empty trust.
Don’t leave anything to chance
Even the slightest mistakes when creating an SNT could lead to unintended consequences, such as disqualifying your loved one from essential benefits. Reaching out for qualified legal assistance can help you do everything right and create a trust that provides lasting financial security and peace of mind.
