Also known as a “supplemental needs trust”, Special Needs Trusts are used to provide support to a minor or adult child with mental or physical disabilities. The idea behind the trust is to allow incremental support for the beneficiary without jeopardizing their eligibility for means-tested benefits like social security, Medicaid, or food stamp benefits for the beneficiary.
A distribution of as much as $2,000 can make someone ineligible for these benefits and while $771/month (the maximum monthly SSI benefit) does not seem like a lot of money to miss out on, losing Medicaid benefits as a person with disabilities could be devastating.
Generally speaking, the trust must be discretionary and must be restricted to only allow distributions for the support of the beneficiary, so long as it won’t kick the beneficiary off of their means-tested benefits. They are complex planning instruments and must comply with both federal and state law.
It’s best to consult an Estate Planning Attorney before attempting to create a Special Needs Trust.
Paul Yokabitus is the CEO and Managing Partner of Cary Estate Planning, a Cary, NC, estate planning law firm. With years of experience in estate and elder law, he has zealously represented clients in various legal matters, including estate planning, guardianship, Medicaid planning, estate administration, and other cases.
Paul received his Juris Doctor from the Campbell University School of Law and is a North Carolina Bar Association member. He has received numerous accolades for his work, including being named among the “Best Attorney in Cary” in 2016 and 2017 by Cary News and Rising Star in 2020-2023 by Super Lawyers.