A special needs trust is a type of trust that is set up to specifically handle the needs of a beneficiary that is considered disabled or mentally ill. It is similar to a regular trust and is managed by a person called a “trustee.” The person that benefits from the trust is called a” beneficiary.” A special needs trust is generally created when a beneficiary lacks the ability or mental capacity to run and manage their own finances.
Although the trustee of a special needs trust is typically a family member, a third party may be appointed by the court if there is not a trustworthy or appropriate family member available. Since a trust can last until the death of the beneficiary or the funds in the trust are depleted, care should be taken when choosing a trustee, especially if the trust is is set up for the benefit of a minor or younger person.
While there are many reasons to set up a special needs trust, one of the more common reasons is to ensure that the beneficiary does not lose any of the government benefits one have been receiving. This is because when a person leaves assets or a lump sum of money to loved ones in a will, it can actually disqualify an heir from being able to participate in government assistance programs. Interestingly, this is because the beneficiary does not have control over the trust, so government programs such as Medicaid and the Social Security Administration will often ignore the assets in a trust when they are determining whether a disabled person is eligible for a government program.
Individuals who are interested in learning more about special needs trusts may find beneficial information on the website.