Caring for a loved one with special needs can require extra planning, especially when thinking about the future. Many families want to leave money or property to help a loved one live comfortably, but giving assets directly can cause problems. A trust may be the ideal solution.
What is a special needs trust?
A special needs trust, also called a supplemental needs trust, holds money or property for a person with a disability. This type of trust lets someone provide support without hurting eligibility for public benefits. The trust owns the assets, not the person with the disability. Because of this, benefits like Supplemental Security Income (SSI) and Medicaid usually stay in place.
The trust pays for things that public programs don’t fully cover. This can include therapy, home care, education, travel, or recreation. It helps improve the quality of life without replacing the basic help from the government. The person with special needs still qualifies for support while also having access to extra help from the trust.
What types of special needs trusts are available?
There are two main types of special needs trusts. A first-party trust uses the person’s own money, often from a legal settlement or inheritance. A third-party trust uses money from someone else, like a parent or grandparent.
Families usually use third-party trusts in their estate plans because these don’t require repayment to the government after the person passes away. In contrast, first-party trusts often must repay Medicaid after death.
A special needs trust makes a big difference. It lets families support a loved one while keeping public assistance intact. With the right structure, the trust can offer lifelong support and make the future more secure.
