How to Provide for Your Child’s Future Needs

Special Needs Trust FAQs:

• When Do You Need a Special Needs Trust?

Government programs can go a long way in providing for your child. But consider this: Individuals with more than $2,000 in assets or couples with more than $3,000 in assets are not eligible for SSI benefits.

A special needs trust lets you provide more for your child without disqualifying them from benefits like SSI. It also may allow them to qualify for other programs, such as life skills activities, which use Medicaid eligibility as their standard for admission.

These are some financial circumstances that might prompt you to consider a special needs trust:

• Your loved one receives an inheritance
• A family member wants to give them a financial gift
• Your loved one receive a personal injury settlement
• Your family experiences a divorce
• Your child is the beneficiary of a child support settlement



• What Types of Special Needs Trusts Are Available?

Special needs trusts come in different forms:

• Self-settled special needs trusts: This trust is set up with assets belonging to the person with disabilities who the trust benefits.

• Third-party special needs trusts: This trust is established with funds from someone other than the beneficiary of the trust.

A special needs trust is managed by one or more trustees, who you should choose carefully. Their responsibilities are long-term and many. They should be able to handle investments, be knowledgeable about the intricacies of government benefits and understand the rules governing distributions of money from the trust.

Trustees can be family members, friends, financial institutions or special needs attorneys.

An experienced special needs lawyer can help you choose the right type of trust for your family and set it up properly.

Every case is different, so working with a lawyer ensures that the trust is tailored to your child’s particular disability and specific future needs.

Contact Cuddy Law Firm



• What Expenses Can You Pay for with a Special Needs Trust?

You can use a special needs trust to pay for items like these:

• Accessible vehicles
• Service animals
• Education and vocational training
• Home accessibility improvements
• Communication equipment
• Mobility equipment
• Assisted living arrangements
• Hobbies
• Travel

A special needs trust is not meant to provide for everyday needs. Those are intended to be covered by Medicaid and SSI.

Using a trust to pay for basic expenses such as food, utilities, rent or mortgage payments could threaten your child’s eligibility for government assistance.



• What is a third-party special needs or supplemental needs trust?

A third-party special needs or supplemental needs trust is a tool that— when prepared properly—can provide support for your loved one with disabilities while also protecting their access to government benefits. This type of trust can be used to protect access to government benefits granted based in part on financial need, including Medicaid and Supplemental Security Income (SSI). In many cases, the existence of this type of trust will allow family members and friends to contribute to the trust without jeopardizing access an individual with disabilities has to government benefits.



• What is a self-settled special needs trust?

A self-settled special needs trust is a trust set up with assets belonging to the person with disabilities (the trust beneficiary). This could include settlements from personal injury or medical malpractice claims or inherited or received from other sources. Self-settled trusts generally have more reporting requirements and in many cases must be approved by a court.



• Does my family need a special needs trust?

Every family’s situation is unique. The use of special needs trusts should be considered as part of your overall special needs planning process. One thing is very important: You should work with an attorney who has a lot of experience in special needs planning and can advise you and your family on the best option.



• What kind of public benefits can special needs trust beneficiaries receive?

A special needs trust can provide financial resources for your child while preserving your child’s ability to qualify for means tested government benefits meaning benefits that take economic resources into consideration. Examples include health care coverage under Medicaid, or Supplemental Security Income (SSI), which provides recipients with a monthly income. The fact that assets and sometimes other income is deposited into a special needs trust generally allows an individual to maintain government benefits. The trust may be used for costs over and above what government benefits will pay for.



• What can a special needs trust pay for? Can I buy a house or a car with it?

A special needs trust isn’t meant to provide for everyday needs covered by Medicaid and Supplemental Security Income (SSI.) So using a trust to pay for basic expenses such as food, utilities, rent or mortgage payments could jeopardize your child’s eligibility for government assistance. You may be able to use the trust for many other items, including cars, home purchases, appliances, furniture, travel, classes, professional services and more. It’s very important to consult with an attorney on appropriate expenditures.