A special needs trust (sometimes termed a supplemental needs trust) is an irrevocable trust that permits a person with disability to have assets held in trust for them without jeopardizing their right to receive essential needs-based government benefits such as Supplemental Security Income (SSI) and Medicaid. The applicable federal statute in the United States is found at Title 42 United States Code Section 1396p(d)(4)(A). In addition, some states have their own statutes.
Without a special needs trust, all assets possessed by the person with a disability must be used up before they can receive SSI and/or Medicaid. The trust allows families or trustees to supplement the living expenses of the person who is recognized as disabled without risk of them losing their government benefits.
Most often, a knowledgeable attorney is used to draw up the trust. That said, there are several good guides that allow families to develop a special needs trust without the assistance of an attorney. We recommend the Nolo guide: Special Needs Trusts: Protect Your Child’s Financial Future (7th Edition) by Kevin Urbatsch and Michelle Fuller-Urbatsch.
