Overview
A Special Needs Trust provides for a beneficiary with disabilities without disqualifying them from government benefits like SSI and Medicaid. The trust supplements—but does not replace—government assistance, paying for things Medicaid doesn't cover: education, recreation, personal care, travel, and quality-of-life expenses.
Best For
- Families with a member who has physical disabilities
- Parents of children with intellectual disabilities
- Those providing for beneficiaries with mental health conditions
- Anyone wanting to improve quality of life for a disabled loved one
Key Features
- ✓ Supplements without replacing government benefits
- ✓ Pays for education, therapy, recreation, travel
- ✓ Preserves SSI and Medicaid eligibility
- ✓ Can fund personal care items and electronics
- ✓ Trustee manages distributions carefully
- ✓ Remainder beneficiary provisions
📊 Tax Benefits
- ✓ Assets not counted for SSI resource limits
- ✓ Trust income taxed to trust or beneficiary at lower rates
- ✓ Charitable remainder provisions available
- ✓ No estate tax inclusion for third-party SNTs
Considerations
- Trustee must understand government benefit rules
- Distributions must not replace government benefits
- First-party SNTs require Medicaid payback at death
- Third-party SNTs have no payback requirement
- Professional trustee recommended for complex cases
- Should coordinate with ABLE accounts if available