Understanding a special needs trust


If necessary, you want to ensure that your disabled loved one qualifies for SSI or other government assistance programs in North Carolina. Depending on your loved one’s finances, you may want to consider a special needs trust as part of your estate plan.

What is a special needs trust?

Disabled Americans are eligible for Social Security, Supplemental Security Income, Medicaid and Medicare. Government bodies will base benefits on factors like income. These programs often ask recipients to maintain income and assets below a certain limit.

A special needs trust is a legal document that allows a mentally disabled, physically disadvantaged or chronically ill person to receive funds that won’t impact eligibility for public assistance disability benefits. With this type of trust, a person or entity gets power of attorney to act on behalf of another person in managing assets. The trust is a sound strategy for circumventing the possibility of losing program eligibility.

Benefits of a special needs trust

Estate planning that includes a special needs trust is beneficial because the agent has assurances that proceeds go to stipulated expenses. The beneficiary receives maximized support without risking program or service opportunities.

An example is parents putting assets into a trust to ensure that a disabled child gets her needs met. The parents assign a trustee to oversee the trust as opposed to giving a family member access to funds directly. The trust is irrevocable, so creditors or family members cannot seize assets. No portion of the trust is at risk in a lawsuit or financial crisis.

Creating a trust

Creating a trust requires unique and careful wording. The document has to be precise to ensure validity, and it must confirm directives and purpose. Public assistance programs will investigate your loved one and base support on predicated restrictions, so it’s important to ensure that the trust isn’t included in the qualifying process.