A special needs trust is created for a person who has a physical or mental disability and lacks the capacity to manage their finances. The person who manages the trust is called the trustee and the person for whom the trust is managed is called the beneficiary.
A family member can serve as a trustee for the beneficiary or if a family member is unavailable, the trustee can be appointed by the court.
A person with disabilities may qualify for government programs such as Supplemental Security Income (SSI), Medicaid, subsidized housing or other programs. Usually, a special needs trust is created to ensure that the beneficiary can maintain his or her government benefits. It allows the trustee to control the management of the beneficiary’s finances, so the trust assets are not considered when the beneficiary’s eligibility for SSI and Medicaid is determined.
Trusts may include a provision that upon the person’s death, the state will receive funds remaining in the trust equal to the total amount of Medicaid paid on the person’s behalf.
A pooled trust is a special needs trust that is managed by a nonprofit organization. They pool money from several families and invest it. Each beneficiary has his or her own separate account and trustee. Sometimes, if there is no other suitable trustee, this type of trust may be a useful option for beneficiaries.
Special needs trusts are created based on the individual’s circumstances and must include required language to be effective.
An experienced attorney can provide advice and answer questions about special needs trusts.