Special Needs Trusts: Providing for a Loved One Without Losing Government Benefits

If you have a family member with a disability — a child, a sibling, a grandchild — estate planning takes on a particular urgency and complexity. A well-intentioned inheritance left in the wrong way can actually harm the person you're trying to help.

Many individuals with disabilities rely on government benefit programs like Medicaid and Supplemental Security Income (SSI). These programs have strict asset limits — often as low as $2,000. If your loved one directly inherits money or property above that threshold, they may lose their eligibility for these critical benefits.

A Special Needs Trust (SNT) — also called a Supplemental Needs Trust — solves this problem. Assets held in a properly drafted SNT are not counted as the beneficiary's own resources for purposes of Medicaid or SSI eligibility. The trust can hold significant assets without affecting benefit eligibility.

What can an SNT pay for? The trust is designed to supplement — not replace — government benefits. Common uses include: education and job training, transportation, recreation and entertainment, technology and communication devices, personal care items not covered by Medicaid, and travel and cultural experiences.

An SNT can be funded by parents, grandparents, or other family members through their wills, living trusts, or life insurance policies. There are also self-settled trusts funded with the beneficiary's own assets (such as a personal injury settlement), which have different rules.

The drafting of an SNT must be done with precision. A mistake in the language can cause the trust to be treated as a countable asset, defeating the purpose entirely.

📌 If you have a loved one with special needs, an SNT may be one of the most important gifts you can give them. Let's make sure your plan protects them properly.