What Is A Special Needs Trust?

Video Summary

What is a special needs trust? A special needs trust is also known as a qualified disability trust. This is a very specific type of trust that would need to be set up for an individual that has special needs and that would not want to jeopardize their eligibility for public assistance programs, such as Medicaid and Social Security Disability. The reason that these trusts are employed, generally, is in the situation where one may receive a settlement by virtue of a lawsuit, a car accident, or even an inheritance, which receipt of those assets would potentially make that person disqualified from those public benefit programs.

A lot of times I have people that ask me, that say, "Well, if somebody receives an inheritance, let's say of $100,000, why should that person, even though they have special needs and special medical needs due to those special needs, why does that person still ... Should they be entitled to public benefit programs if they can afford to pay for the care?"

Well, the theory behind that is is that because the care is so expensive for somebody that has special needs, that they would need to utilize those funds for other things above and beyond what those government programs entitle that person to. In a hypothetical situation if you were not receiving Medicaid or Social Security Disability because you had that $100,000 that money would be expended very, very quickly. Which would essentially leave that same person in the very same position they were in in a very short amount of time, prior to actually receiving those funds. A special needs trust is a very good vehicle to be able to preserve those assets for somebody in that situation.

Similarly, a special needs trust may be an option in estate planning in the event that the person doing the estate planning, let's say a mother or father, has an adult child that does have special needs. In that situation a special needs trust can be incorporated into a last will and testament to preserve that eligibility for that adult or minor child once the person, the testator, passes away.

That's really what a special needs trust is in a nutshell. If you have any other questions about a special needs trust or whether a special needs trust is the right vehicle for you or your loved one, I'd love to be able to help you. Please give me a call here at the law firm of Waller & Mitchell. Our phone number is 727-847-2288. Or you can visit our website at www.rdwaller.com. We do have a portion on our webpage which allows you to email us questions. Thanks so much.