What Is a Special Needs Trust?

If you want to provide for a disabled child or adult, you might want to consider a special needs trust, also called a supplemental needs trust.

A special needs trust gives a disabled or incapacitated person the little “extras” in life without endangering their public assistance benefits such as food stamps, Medicaid, or Supplemental Security Income “SSI.”

Such trusts can allow for education, travel, and home care above what is provided by public benefits, etc.

• –the recipient be less than 65 years old at the time the trust is established
• –the trust be irrevocable
• –the trust must be set up by a parent, grandparent, guardian, or the court (if the trust is a pooled special needs trust, the trust can be set up by the disabled person)
• –trustee must have absolute discretion over the funds; no direct payments to the disabled recipient
• –if a pooled trust, at the death of the disabled person, the trust can retain a portion of any remaining funds to benefit other beneficiaries of the pooled trust.

Special Needs Trusts Funded by Those Other Than the Disabled Person.

This type of trust does not need to reimburse the state for Medicaid costs at the death of the disabled person.

Other features include

• –the trust can be revocable by settlor
• –can be established after disabled person turns 65
• –any remaining funds can go to other family members if disabled person passes away

Please contact your Estate Planning Attorney who can help you establish a Special Needs Trust for your loved ones.

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Paul A. Kraft, Estate Planning Attorney

Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.

Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.

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