Special Needs Trusts for Individuals with Disabilities

Special needs trusts are a helpful planning tool if a client has a disability or has family members or friends who are disabled. These kinds of trusts are designed to preserve a disabled person’s eligibility for government benefits. Monthly income and the value of resources in the person’s possession are evaluated to determine eligibility for certain government benefits. If disabled individuals receive public benefits, then it is possible that small inheritances or gifts may imperil their eligibility for public assistance. The goal of these trusts is to provide individuals with disabilities an option for supplementing their daily living expenses when the government benefits received are insufficient and to allow family and friends of individuals with disabilities to retain assets for accommodation of the individual’s comfort and well-being.

Special needs trusts are discretionary, spendthrift trusts. This means that the trustees of these trusts have complete control over distributions made to the beneficiaries to prevent depletion of trust funds, which could be caused either by overspending on the beneficiary’s behalf or beneficiary’s creditors reaching the trust monies. The trustee has the additional responsibility of ensuring that the amount of funds distributed to the disabled beneficiary does not render him or her ineligible for government benefits.

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