When a person has a mental or physical disability that impacts his or her ability to make financial decisions, it may be necessary to pursue a special needs trust. This type of trust allows a person, called a trustee, to manage the trust on behalf of the person with the needs, called the beneficiary.
A trustee can be a family member, a friend or a third party appointed by the court. It’s important to choose a trustworthy person for this role because the trustee has many responsibilities and the special needs trust can be in place for as long as it is needed.
Special needs trust benefits
Many people who have a mental or physical disability qualify for Supplemental Security Income (SSI). Sometimes, well-intentioned loved ones will leave money to the person with special needs in a will. However, this could make the person ineligible to receive SSI.
Because a special needs trust is managed by the trustee and not by the beneficiary, the assets in the special needs trust aren’t considered when determining eligibility for government programs.
The trustee can use the funds in the trust to purchase items for the beneficiary, such as personal care items, household items, education and medical expenses.
A pooled trust is managed by a non-profit corporation and some families choose a non-profit corporation as the trustee if they are unable to find a suitable loved one or friend. The non-profit organization pools the money from several families, invests it and then each beneficiary has his or her own separate account.
If families have questions about creating a special needs trust, an experienced estate planning attorney can help.