Suppose you have a child with a disability.  Perhaps the child was born with a mental disability.  Perhaps he or she was born with a physical disability.  In some cases, the child may have been normal at birth, but later in life acquired a mental disability, or acquired a physical disability.  You love the child and want to provide the best possible care for your child.

Because of the disability, the child qualifies for government benefits.  Perhaps the child receives Medicaid benefits.  Medicaid is a joint federal and state program which provides important medical benefits.  Perhaps the child receives Supplemental Security Income, known as “SSI.”  SSI is a program of the Social Security Administration.  It provides cash payments to persons in need who are 65 years of age or older, blind, or with a disability.

In order to qualify for Medicaid or SSI, the person with the disability must have $2,000 or less in assets.  Also, there are certain income limits.  (Please understand that the usual poverty level income limits do not apply to someone in a nursing home who needs Medicaid help.  Even persons with large retirement income can qualify for Medicaid for nursing home costs with proper planning.)  You love your child, and want to provide for the care of your child, but if you do, the child may lose valuable Medicaid or SSI benefits.  This is where a Special Needs Trust can be very useful.

A Special Needs Trust is a kind of trust specially designed to provide for a person with a physical or mental disability.  The term “Special Needs Trust” is used in the United Kingdom and Ireland, as well as in the United States.  In the U.S., Special Needs Trusts are sometimes called Supplemental Needs Trusts.  Both terms mean the same thing.

A Special Needs Trust is used to provide financial help for a person with a disability who receives government benefits, or who may in the future need government benefits.  The trust can be set up by a father or mother, grandparent, aunt or uncle, or anyone else concerned about the person with a disability.  The person with the disability could be a minor child, an adult child, or even an elderly person in a nursing home.  The Special Needs Trust is written in such a way that the person with the disability will not lose Medicaid or SSI benefits.  The trust assets are not considered assets of the person with the disability, so he or she still has less than $2,000.  Yet, the Special Needs Trust can provide money for “special needs” or “supplemental needs” besides what Medicaid or SSI provides, without disqualifying the person from Medicaid or SSI benefits.

“Special needs” might include things like dental care, unreimbursable medical expenses, supplemental nursing care, recreation, cultural experiences, outings, travel, telephone, television, computer, reading and education.  The idea is that the special needs trust provides money for things or activities which make the person’s life more rich and enjoyable, without losing the government benefits.

Many times a parent has two or more children, of which one has a disability.  When the parent makes a will or trust, the parent may have been advised to leave everything to the healthy children so that the child with a disability is left out of an inheritance.  This is not necessary.  With a Special Needs Trust, the parent can leave an inheritance for both the healthy children and for the child with a disability.  The child with a disability can continue to enjoy government benefits, and also enjoy a richer life because of financial help from the Special Needs Trust.  When the child with the disability dies, the money remaining in the Special Needs Trust can then go to the healthy children, or if they are gone, to grandchildren.

With a special needs trust, the parent does not have to feel guilty about disinheriting a child with a disability.