Special Needs Planning

A special needs trust, sometimes called a "supplemental needs trust," allows individuals to leave money to a disabled loved one without jeopardizing any government benefits to which he or she may be entitled, such as Social Security and Medicaid.  

While it might seem like a good alternative simply to leave a set amount of money to a close relative, with the understanding that the money will be spent on the disabled child, this often backfires.  For example:

• The money can fall prey to judgments or divorce settlements against the relative, or can be lost in bankruptcy
• The relative cannot be legally forced to use the money to benefit the disabled person
• The relative, to whom the money is left, may be taxed at a higher rate than the disabled child or a trust
• Should the relative die before the disabled child, the money would go to his or her heirs

A special needs trust avoids these potential problems without putting an emotional strain on family relations.

Monthly SSI benefits can be spent on food, clothing and shelter. The special needs trust money can then go toward little extras that make the beneficiary’s life more comfortable, such as recreation, counseling, entertainment and medical attention beyond the simple necessities of life.  Special needs trust money also can be spent for final funeral and burial expenses.