Over the past week, our office has experienced an unusual influx for a one week time period: three new clients seeking special needs trust planning for their disabled relatives.  One case dealt with autism, one with Downs Syndrome, and one with severe epilepsy.  The common thread running through all three cases was a dual concern that public benefits for disabled individuals are threatened by budget issues, and the desire to ensure that their loved were able to qualify for and receive whatever public benefits programs were available.

What is a special needs trust?

A special needs trust is a trust that is specifically designed to provide support for disabled individuals without causing ineligibility for various applicable public benefits programs, such as Medicaid, SSI (supplemental security income), or other programs offered by various state and local governments.  Such a trust is imperative for those who plan, or desire, to leave an inheritance to a relative or loved one who is disabled and receiving public benefits from any source.  If an inheritance is left directly to the disabled individual, in most cases it will render the individual ineligible for virtually all of the public benefits programs.  The special needs trust allows the inheritance to managed by a trustee chosen by the person establishing the trust, with the specific instructions contained in the trust that the trustee should not make any distributions to or for the benefit of the disabled individual that would cause ineligibility for benefits received from governmental sources.

Why is it important for someone to put a special needs trust in place if they want to leave money to a disabled person?

The issues directly prompting the greater than usual activity in the special needs area include reductions and elimination of some of the public benefits programs caused by budget restrictions forced upon government agencies.  That, coupled with the realization by the parents of the disabled individuals that government benefits programs historically relied upon to provide basic support may not longer be available for that purpose, has led many to explore more closely the benefits of a special needs trust to ensure that their disabled loved ones will be properly cared for after the parents are no longer able to do so.


Interestingly, in this weekend’s Florida Times Union appeared an article entitled “Programs for Disability Benefits on Unsustainable Financial Path.” The article describes the increasing cost of disability programs for the Social Security Administration and the decreasing revenues generated by the program because of the level of unemployment.  At the same time, in the same newpaper, was a letter from a reader describing the need for and positive impact provided by the Social Security Disability program.

The bottom line is that special needs trusts are becoming increasingly important as a means of providing support for the disabled, but the basic purpose of the special needs trust is shifting from that of providing enhancements to the disabled individual’s basic financial life support, to replacing government programs as the primary source for that basic financial life support for disabled individuals.  If the present trend continues, it may become imperative for families to establish a special needs trust for their disabled loved ones just to ensure that basic support in the future.

One of the unique features of a special needs trust established during the parents’ lifetime (an inter vivos third party special needs trust) is that anyone can make contributions to the trust at anytime.  In many instances, family and friends will make the special needs trust the beneficiary of life insurance policies and retirement plans.  By funding the trust in such a manner, the parents and other family members are able to directly provide for the care of the disabled individual while they are alive, and upon their deaths the life insurance or retirment plans take over the financial burden.

How do I get a special needs trust into my will for the benefit of a disabled person?

Regardless of how the special needs trust is funded, it is obvious that it is moving from a place of supplementing the needs of the disabled, to providing basic financial support for those individuals who are unable to adequately support themselves.

You can learn more about special needs trusts here.

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