Special Needs Trusts: Why They Matter


March is Developmental Disabilities Awareness Month and a good time to talk about a topic that is near and dear to us. Families with a special needs child are often faced with many challenges - including future care planning, which usually prompts anxiety and concerns. But it doesn’t have to.


We believe with the right guidance and a solid estate plan in place, parents can have confidence that they’ve protected their child with disabilities for life. One very important way to do this is through a Special Needs Trust.


What is a special needs trust?

A special needs trust is an estate planning tool that holds and protects the financial assets of a beneficiary who is disabled. This legal structure allows assets - such as life insurance or inherited investments - to be held on behalf of someone with disabilities. It offers an avenue to provide resources for your loved one in a way that does not jeopardize his or her eligibility for government benefits.


How is a special needs trust different from a living trust?

A living trust is an estate planning tool that allows you to easily transfer assets to beneficiaries, while avoiding the often lengthy and expensive probate process. In essence, it is often used as a substitute for a living will.


A special needs trust is designed to provide assets and resources for a child or loved one with a disability. Often special needs trusts are established, but not funded while the parent is alive. Upon the parent’s death, their estate plan transfers the child’s inheritance into the trust. These types of trusts are often used for supplemental therapy and medical treatments not covered through government programs.

While there are many types of special needs trusts, they typically fall into two categories:

  • Third-party trust: funded with assets belonging to someone other than the beneficiary

  • Self-settled trust: assets belong to the beneficiary


Why would I need one?

One major benefit of a special needs trust is that it won’t interfere with the beneficiary’s eligibility for government benefits, like Medicaid. These programs often have strict regulations, but a special needs trust won’t prevent a beneficiary from qualifying. This allows the individual’s inheritance to be used for medical treatments and/or living expenses that supplement the government programs. When not planned correctly, your beneficiary could end up not qualifying for essential government benefits.

We believe every special needs trust needs to be personalized and custom-designed to the individual family. There are multiple types of special needs trust options and many other considerations to ensure your child is protected and cared for. Contact us for a free consultation that will empower you to make the best decision for your family. It is our priority to ensure your loved one is cared for and protected for life.




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