Protect Your Disabled Loved One With A Special Needs Trust

As you get older, you may be aware that your adult child who is disabled or unable to work and receives SSI or Medicaid benefits, may never be able to take care of him/herself. A concerned parent should be aware that there are ways to protect that disabled child for his/her lifetime and not endanger the child’s government benefits. The best way is to create a SPECIAL NEEDS TRUST.

A Special Needs Trust (SNT) can be produced from the child’s own money – such as an inheritance, an insurance payout, or a personal injury settlement — or the money of a third party. This trust produced from the individual’s own funds is more expensive because it must be approved by the court. The easiest and least expensive SNT to make is when a parent or grandparent or other third party pays for the trust and contributes a sum of money for the assistance of the disabled person, who is known as the beneficiary.

One of my clients had a brother who, at 45, was unable to keep up a job due to harsh COPD. The brother received SSI and Medi-Cal but had very little money for anything beyond basic necessities. The sister wanted to contribute $100,000 for her brother’s lifetime special needs. She paid for the trust and named her other brother as trustee. The trustee set up a bank account in the name of the trust and used the funds to pay for disabled brother’s needs, above and beyond his room and board, which are the only things covered by government benefits.


· An SNT ensures that a disabled person with assets over $2000 will nevertheless qualify to receive SSI, Medi-Cal and other government assistance necessary for their health and well-being.

· An SNT gives peace of mind to parents that their disabled child will be taken care of when they are no longer physically able to provide the care.


· A diligent trustee must be appointed who must manager all the money in the trust. The trustee’s job and could last a long time – for the complete lifetime of the disabled person.

· The beneficiary may never receive cash from the trust – only items for his/her special needs, such as medical and dental expenses, medical equipment, training and education, insurance, transportation, entertainment, already vacations, automobiles, real character, modifications to adjust to the disability and other items to enhance the quality of life. The trustee pays for everything and the beneficiary receives what the trust has paid for.

· Most disabled persons want to manager their own money and must be convinced that this would disqualify them from receiving government benefits.

· Special care must be taken about distributions if the beneficiary is on Section 8 housing.

I f you have a child who will need outside assistance for the rest of his or her life, see an attorney sooner instead of later to discuss the possibilities of setting up a Special Needs Trust. You’ll sleep a lot better once the action has been taken.

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