When a person has a physical or mental disability and no longer has the capacity to manage his or her own finances, it may be necessary to consider a special needs trust. A special needs trust is managed by a trustee on behalf of a beneficiary. It allows the trustee to manage the beneficiary’s property and assets, based on the beneficiary’s specific needs.
A family member or another trusted person can serve as a trustee or if a suitable trustee is not available, the court can appoint a third party. The trustee can use the trust assets to provide necessities for the beneficiary such as medical care, education, personal care items, household items and other products or services.
A special needs trust may be used to ensure that beneficiaries maintain government benefits such as Supplemental Security Income (SSI), Medicaid and housing benefits, among others. When a special needs trust is in place, the trustee controls the management of the beneficiary’s assets, not the beneficiary. Therefore, those assets are not considered when determining the beneficiary’s eligibility for the government benefits.
Even if the family members do not want to pursue government benefits currently, it may still be beneficial to put a special needs trust in place.
If the trust is managed by an organization, beneficiaries may be eligible for a pooled trust. A pooled trust includes money from several families that is invested, but the beneficiary has his or her own separate account and trustee to manage the funds.
Special needs trusts must include required language to be effective. An experienced attorney can help families with their questions about special needs trusts.