• Michael Casterlow

Special Needs Trusts: Do I need one?

Updated: Feb 13, 2020

Special needs trusts, or supplemental needs trusts, are irrevocable trusts established for the benefit of physically or mentally disabled individuals.

There are several advantages to establishing a special needs trust. Most important of these advantages is that special needs trusts protect assets of disabled adults while maintaining eligibility for governmental and private benefits.

A disabled individual may lack the mental capacity to manage his or her own financial affairs. A special needs trust ensures that the individual's assets will remain under the control of an appointed trustee. This person has a duty to protect the assets of the trust and to act in the best interest of the disabled individual at all times. While the funds may not be given directly to the disabled individual, they may be used to pay for education, medical expenses, personal care attendants, or any other goods or services that benefit the individual. Additionally, the funds in the trust account are not subject to creditors or seizure. Thus, the funds will remain available to care for the disabled individual at all times.

If a disabled adult holds more than $2,000 in assets, he or she will not qualify for the Social Security Administration's Supplemental Security Income Benefits (SSI). In addition to providing the individual with a monthly stipend, SSI eligibility qualifies a disabled individual for other governmental programs, including Medicaid and food stamps. Since a disabled individual has no control over the money or assets in a special needs trust, the contents of the trust are not considered when calculating the individual's total assets. Special needs trusts thus ensure that disabled individuals will remain eligible for governmental benefits, regardless of the actual value of their total assets.

To establish a Special Needs Trust, the trust document, as well as the individual to benefit from said trust, must meet certain requirements. It is always best to discuss with an attorney whether you or a loved one could benefit from a Special Needs Trust. Sometimes, the trust will not need to be established until much later, and should be included in an estate plan. Mike Casterlow can help you figure out if a Special Needs Trust is appropriate for your situation and draft a document that will meet federal and state standards.