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A special needs trust ("SNT") is a legal document designed to benefit an individual who has a disability, while allowing the individual to remain qualified for governmental assistance programs available for his or her care. A SNT can be used for supplemental and extra care over and above what the government provides. A SNT is meant to not only maintain benefits eligibility, but also to bring enjoyment and new, positive experiences to the beneficiary.
For example, if an individual is receiving SSDI or Medicaid, an outright bequest of an inheritance or gift may disqualify the individual from continuing to receive these benefits. The individual would therefore have to spend down their inheritance or funds before qualifying (or re-qualifying) for such programs. If the inheritance or gift is placed in a qualifying SNT, the individual will continue to receive benefits from SSDI and Medicaid; however, the funds in the SNT are available to better the individual's life and to provide for services or equipment not covered by governmental programs.
Because the beneficiary of the SNT cannot have direct access to the funds in order to continue to qualify for other governmental programs, you will need to name a Trustee to manage the assets. The Trustee should be an individual or trust company who you believe would make the best financial decisions for the beneficiary and would follow your wishes in assuring the beneficiary receives funds from the SNT according to his or her needs. Generally, you will want to name several "successor" Trustees in the event the Trustee named is unwilling or unable to serve for the beneficiary's lifetime.
In addition to the selection of a Trustee, there are many other considerations which should be addressed in a SNT. Such considerations vary from family to family, so an attorney experienced with SNT planning should be consulted to ascertain what other factors should be considered. Often times, a SNT is part of an overall estate plan which may include bequests to other beneficiaries, medical directives, powers of attorney and other legal documents to provide for the entire family.