Special Needs Trusts
Persons with disabilities often receive important benefits that allow them to access supplemental income and medical care. These programs limit the amount of resources the person can have while receiving the benefits. The purpose of a special needs trust is to maintain the eligibility for benefits when resources exceed the allowable limit. The funds in the special needs trust are used to pay for the special or supplemental needs of the disabled person.
Types of Special Needs Trusts
There are two main categories of special needs trusts. In the first category, the disabled person’s resources fund the trust. For this category of special needs trusts there are restrictions on who can set up the trust and how distributions are made. Additionally, trusts in this category must contain a provision that allows the state to be reimbursed for any medical services provided to the disable person over the course of his or her lifetime.
In the second category of Special Needs Trusts, the trust is funded with assets contributed by someone other than the disabled person, such as a parent, a sibling, or a friend. There are generally fewer restrictions associated with trusts in this category, which is just one of the reasons they are such a useful planning tool for people with disabilities.
Depending on the type of disability benefits received, a special needs trust may greatly enhance the quality of life for the disabled person.
