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WHAT IS A SPECIAL NEEDS TRUST?

A Special Needs Trust is a trust that can be used to supplement a disabled beneficiary’s needs while allowing that beneficiary to continue receiving his or her governmental benefits. These benefits include Supplemental Security Income (SSI), Social Security and Medicaid. Because these benefits are income based, a beneficiary that inherits a sum of money would be disqualified from receiving those benefits.

One way to avoid this would be to create a special needs trust for the disabled beneficiary. Then, in place of leaving property directly to that beneficiary, you would leave it to the special needs trust. Because the beneficiary does not have control over the assets, it is not counted as income for eligibility purposes.

The trustee of the special needs trust can use the trust assets to pay for personal care, vacations, home furnishings, out of pocket medical and dental expenses, education and so on for the beneficiary. The trustee would have complete discretion over how the trust funds are used for the beneficiary and could make the decision to end the trust if the beneficiary no longer qualifies or needs the governmental assistance.

If you are considering this type of trust, you should consult with an experienced estate planning attorney. A trust that is not set up properly could have unintended consequences for your beneficiary. However, when used properly, a special needs trust can truly add to your disabled beneficiary’s quality of life.

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