When To Adopt a Special Needs Trust Into Estate Planning
A Special Needs Trust (often referred to as a supplemental trust) is critical for providing funds to a beneficiary that suffers from a disability, in a way that also preserves their ability to receive critical government benefits. Parents with a child that has special needs will set up a Special Needs Trust to ensure their child receives a distribution of their assets at the time of their death.
Because the child does not own or control these assets, the Trust does not put the child’s eligibility for Medicaid or Supplemental Security Income (SSI) at risk. Individuals with a disability are likely in need of lifelong assistance, especially regarding their health care needs.
As most people with disabilities may never be employed, receiving continued health insurance under Medicaid ensures their consistent care. If a disabled individual inherits assets directly from his or her parents, this will likely disqualify the individual from receiving any further Medicaid benefits. This ensures continued coverage of SSI and Medicaid, regardless of the dollar value of the trust, as the government does not count these funds as belonging to the beneficiary.