Often, individuals with disabilities may qualify for some sort of government assistance such as Supplemental Security Income (SSI), Medicare/Medicaid, vocational rehabilitation or subsidized housing. Many people make the mistake of leaving assets to their disabled loved ones through a “Last Will & Testament” document or some other form of account. But acquiring assets, such as a lump sum of money or property, can disqualify your loved one from these types of government assistance programs, require the Special Needs person to pay for all of his or her medical and living expenses until that person’s assets are below the threshold required to qualify for benefits, and endure a waiting period before qualifying for benefits.
By setting up a Special Needs Trust, instead of solely using a Will or some other type of account, you can avoid these issues. The fact that the trustee has total control over the management of the assets or funds, and the beneficiary does not, is the key controlling factor. Government program administrators, such as the ones from SSI and Medicaid, ignore the trust assets when considering eligibility, as long as the Special Needs Trust is administered properly.
Special Needs Trusts can also be used to set up inheritance funds or proceeds from a lawsuit settlement on behalf of the disabled person. For example, this way, if your loved one is the plaintiff in a successful lawsuit or inherits assets, those funds will go into the Special Needs Trust (for their benefit, but not in their control) and will not disqualify him or her from receiving those government benefits. On the flip side, if someone attempts to take advantage of that beneficiary, or if the beneficiary is ever sued, the funds in his or her Special Needs Trust cannot be touched and they are not subject to any court-issued judgment.
Some typical uses of Special Needs Trusts include:
• Financial protection in case the primary caregiver dies or becomes incapacitated.
• Therapies and extra caregiving unavailable through Medicare/Medicaid.
• Vacations and other life enhancing experiences.
• Cell phone, computer and internet services.