What is a Special Needs Trust?


Video Summary

Good afternoon.  My name is Tom Mitchell.  I'm a partner in the law firm of Waller & Mitchell, and we’re located at 5332 Main Street in Downtown New Port Richey, Florida.

Did you know that ten percent of the families in America have a family member who is disabled, as defined by federal regulations?  This could be a minor child who suffered malpractice at birth.  It could be an adult who has been injured in a traffic accident or an industrial accident.  It could be a senior citizen who has suffered neglect in a nursing home and incurred serious injuries.

If this describes anyone in your family, we at Waller & Mitchell can help you.  There are federal and state programs designed to assist individuals who have these kinds of injuries and require special assistance.  These programs are all means-tested.  That means that you cannot have more than a certain amount of money and be qualified for these programs.

When these types of injuries happen to someone, typically there is a lawsuit filed on behalf of the injured party.  And this lawsuit can result in hundreds of thousands or, in some cases, even millions of dollars that are to be made available to that person.  The problem is twofold.

First, that money has to last for the entire lifetime of the individual.  And, second of all, if they receive that money in their individual names, they will be disqualified from public assistance benefits because of the means testing that I mentioned earlier.

There is, however, a special kind of trust authorized under federal law that’s called a Special Needs Trust.  In a Special Needs Trust, the money from the lawsuit settlement can be deposited to the trust account, and a trustee can be named, and the trustee can then pay for the special needs of the individual.  The public benefits are still qualified for the individual, and they will pick up the basic nursing home and medical care.

What this allows for is that the special needs of the individual can be met – such things as advanced medical care, special caregiver services, education, entertainment.  Any of those things would qualify.

In addition, with a Special Needs Trust, you can have a trust that’s set up by a third party.  For example, a grandparent who has a disabled grandchild.  In that circumstance, the grandparent sets up the trust, puts the money in the trust, and then the trustee administers the trust for the benefit of the injured party.

The injured party continues to receive their public benefits, so we don’t have any problem with the money being diverted or expended unnecessarily.  And the good thing about the third public trust is that after the death of the beneficiary, the disabled child, the original person who set up the trust can put in the trust where that money is to go if there’s anything left.

So if you’re interested in any of these concepts, give me a call.  I'm Tom Mitchell.  My number is 727-847-2288.