Caring for a loved one with a disability comes with important financial decisions. While you want to provide for their future, if you give them money directly, you could put their Medicaid or Supplemental Security Income (SSI) at risk. A Special Needs Trust (SNT) helps solve this problem. An SNT allows you to set aside funds for their care without affecting their ability to receive government assistance.

What Is a Special Needs Trust?

An SNT is a legal arrangement that holds assets for a person with disabilities. Instead of giving money directly to the individual, you place the funds in a trust and let a trustee manage it. With an SNT in place, the money is used for approved expenses and the beneficiary is still eligible for government programs​.

Funds in the trust can be used for any of the following:

  • Medical treatments and therapy
  • Education and job training
  • Personal care services
  • Recreation and travel
  • Specialized equipment and technology​

Types of Special Needs Trusts

Choosing the right type of trust depends on where the assets come from.

  • Third-Party SNT: This trust is created by parents, grandparents, or other family members using their own money. Since the funds never belong to the beneficiary, Medicaid cannot claim them after their death​.
  • First-Party SNT: This trust is funded with the beneficiary’s own assets, such as an inheritance or lawsuit settlement. It protects Medicaid eligibility but requires any remaining funds to reimburse Medicaid after the beneficiary passes away​.

Why a Special Needs Trust Is Important

A well-structured SNT provides long-term financial security. Without one, an inheritance or large gift could make the beneficiary ineligible for Medicaid and SSI. Once that money runs out, they may have trouble requalifying for benefits​.

An SNT also protects the beneficiary from mismanaging funds. A trustee oversees spending, ensuring the money is used wisely. This prevents financial abuse or unintentional misuse that could leave the individual without resources​.

Secure Your Loved One’s Future

A Special Needs Trust helps you provide financial support while protecting government benefits. It ensures your loved one has access to medical care, personal services, and quality-of-life improvements. Contact O’Brien Law Firm, LLC, in Southaven, MS, today to learn how an SNT can fit into your estate plan.

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