Special Needs Trusts are often used when a dependent or beneficiary has a physical or mental disability, and the Grantor of the Trust is concerned about providing for future needs.

Often well-intentioned parents, siblings, spouses or other relatives don't realize that an inheritance may cause problems for the heir. Under current federal law, any inheritance of more than $2,000 disqualifies disabled individuals from most federal needs-based assistance. Benefits from state public assistance programs may also be affected.

Assets left outright to someone receiving governmental benefits would likely rendered that person ineligible for the government benefits. Yet, special equipment or rehabilitation programs can be expensive and could quickly use up whatever inheritance is left. The beneficiary could end up on government benefits anyway, without the resources the Grantor wanted to provide.

With a properly drafted Special Needs Trust, the person may receive government benefits and still enjoy the inheritance that the Grantor wants to provide. It is essential that the Trust clearly states that it may be used only to provide benefits that are above and beyond the benefits the person receives from any government agency. No part of the Trust can be used to duplicate public assistance benefits of any county, State, federal, or other governmental agency, but it may be used to supplement these benefits. For example, the Trust might provide the means for the person to acquire some specific medical equipment (that the government benefits do not cover), to have dental work done, to buy clothes, or to put a down payment on a house. It can also be used to supplement the government funds provided to pay for home heath aide care.

The Grantor appoints a Trustee who's job is to manage the Trust assets and income, and makes purchases for the benefit of the disabled person (beneficiary). The Trustee is also responsible for helping the beneficiary apply for and receive benefits from available public resources, such as  Supplemental Security Income (SSI), Federal Social Security Disability Insurance (SSDI), and the appropriate state or local services for the disabled. The Trust can be drafted so that it lasts for the beneficiary's lifetime, or until it is determined that the beneficiary is able to manage on their own.

An important point to remember is that the disabled person (beneficiary) cannot server as the Trustee. The whole premise of a Special Needs Trust is that the beneficiary is not considered to have access to the principal or the income of the Trust. The assets of the Trust are for the benefit of the person with the disability, however, the disabled person has no power or authority over the Trust assets.

Do not try to draw this up on your own, or use a form off the internet, even a small mistake may render the beneficiary ineligible for government benefits. The law changes frequently, and the Trust language must comply with the current regulations.  To provide for your loved one, contact an attorney at Haas McNeil & Associates, P.A. to draft the Trust.