What Is the Goal of a Special Needs Trust?
Few things in life can give us the peace of mind that comes with knowing we have protected the health and financial security of those we love. One of the ways parents achieve this is by having a Special Needs Trust created for their disabled family member, according to the article “’There’s No Deadline’: How a Special Needs Trust Protects Your Loved One’s Future” from Women’s World.
A Special Needs Trust (SNT) is an estate planning tool that allows families, usually parents or grandparents, to create a trust to hold assets for a disabled individual without jeopardizing means-tested benefits. Programs like Medicaid or Supplemental Security Income (SSI) limit the amount of assets a recipient can own. Assets in an SNT protect them from disqualification and can be used to enhance their quality of life.
There are two types of SNTs: a third-party SNT is funded by family members. A first-party SNT is funded with the disabled person’s own money. However, for the first-party SNT, when the person dies, Medicaid must be reimbursed for the costs of their care.
Several groups qualify for SNTs, including people with developmental disabilities, those with mental illness, anyone receiving disability benefits and individuals of any age. The SNT may be created when children are young, later in life, or by grandparents who want to provide for a grandchild.
The SNT can be used to pay for a few qualified expenses. The most important one may be housing. There are waiting lists for group homes in most states, and not as many options for adults with disabilities as one would wish. Keeping a child out of institutional life is paramount for many parents. These trusts can also cover expenses such as transportation (including ride-share apps), medical care, hearing aids, glasses, specialized medical equipment, vacations for the beneficiary, social activities and community programs and technology.
An important note: to remain eligible for government benefits, payments for these expenses must be made directly from the trust to the provider. Taking cash out of the trust and giving it to the individual will cause them to lose benefits.
Three necessary features of the SNT are discretionary trustee powers, creditor protection and multiple trustee options. The trustee must have the ability to say no to protect the funds. Assets must be preserved for the individual’s benefit. With a third-party trust, it’s especially important that multiple trustees be named and a clear succession plan be in place.
The Special Needs Trust is valuable to parents who worry about what will happen to their disabled family member when the parents can no longer take care of them. This, like so much of estate planning, protects the family and secures their future.
Reference: Woman’s World (April 11, 2026) “‘There’s No Deadline’: How a Special Needs Trust Protects Your Loved One’s Future”