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.
Author Bio
Paul Yokabitus
Founder & Estate Planning Lawyer
Paul Yokabitus is the founder of Cary Estate Planning, where he helps North Carolina families protect what matters most through wills, trusts, probate, and special needs planning. Known for his “planning, not paperwork” approach, Paul turns complex legal concepts into clear, practical strategies so clients feel informed and confident at every step. He has been recognized as a Business North Carolina Legal Elite attorney and a Super Lawyers Rising Star, and was named to the Triangle Business Journal’s 40 Under 40. A graduate of Campbell University School of Law, Paul lives in the Triangle with his wife, Alix, and their two sons.
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