Special needs planning generally refers to setting up a trust fund for a person with disabilities who receives government benefits that do not cover all of his or her financial needs.
Relatives may want to provide some financial help for their disabled family members, but they do not want their gift of money to disqualify the disabled individuals from receiving government benefits.
In other situations, the disabled person may have a windfall of money from an insurance settlement, lawsuit, or inheritance. This could disqualify him or her from receiving government benefits, which quite often includes fully paid medical insurance coverage.
A special needs trust is one way to deal with these situations. Sometimes this is referred to as a supplemental needs trust or disability trust. They come in different versions and each offers very different protections and outcomes so, your specific family situation should be reviewed by a professional to be certain that the right trust in planning is utilized.
The goal of the trust is to provide things that improve the quality of life for a disabled individual while enabling him or her to retain needs-based government benefits.
Most government disability benefits are also based on financial need, but government agencies do not consider such trust’s assets when considering eligibility for benefits.
If you or a family member is dealing with a disability, a Special Needs Trust may be needed.