What may I include in a special needs trust?

On Behalf of | Nov 22, 2021 | Medicaid and Medical Assistance, Special Needs | 0 comments

A third-party funded or common law special needs trust may hold money or property to support a disabled heir or child. As noted by the AARP, you may add money to a special needs trust in any amount that suits your heir’s or child’s needs.

By creating a trust, you may provide support for your heir without affecting his or her eligibility to receive government assistance. If your adult disabled child receives Medical Assistance, for example, a properly drafted special needs trust would not affect his or her benefits.

How may a trust supplement government benefits?

When leaving money outright to an heir in a will or giving money outright to an adult special needs child, he or she may then become ineligible for government assistance. You may instead place money to a third-party funded or common law special needs trust in your will or created during your lifetime.  The funds cannot go toward purchasing food or making rental or mortgage payments. Government benefits are to be used to cover basic living expenses.

A trustee may spend the trust’s money on allowable items which do not affect the beneficiary’s eligibility for public benefits, such as a cell phone, clothing and medical treatment not covered by Medicaid or insurance.

May I add property to a special needs trust?

You may transfer your existing home to a special needs trust along with the funds to run and maintain it. If your heir currently lives with you, he or she may not need to face an unexpected move after your death. The special needs trust may instead purchase a new home in which the beneficiary can reside, provided there are sufficient funds to run and maintain it.

A third-party funded or common law special needs trust requires naming a trustee who carries out your written instructions. Once created, you may add money and assets to provide for a disabled heir without affecting their government benefits.



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