Needs-based government programs such as Supplemental Security Income and Medicaid programs help people with disabilities by providing cash benefits, medical coverage and long-term supports and services. However, recipients of government benefits can typically retain only $2,000 in total assets for an individual or $3,000 for a couple without losing eligibility.

Supplemental needs and special needs trusts are exceptions to the dollar limit. If certain parameters are met, these trusts preserve eligibility while funding supplemental needs that go beyond food, shelter, and Medicaid benefits.

The trust must be designed specifically to supplement, not supplant, government benefits. Money from the trust cannot be distributed directly to the person with a disability, but to third parties to pay for goods and services for that individual’s use.

Special needs trusts may cover expenses such as:

  • Out-of-pocket medical
  • Dental care
  • Eyeglasses
  • Annual independent check-ups
  • Transportation, including vehicle purchase and maintenance
  • Home purchase and/or modifications
  • Insurance, including payment of premiums
  • Rehabilitation
  • Essential dietary needs
  • Materials and equipment for a hobby or recreational activity
  • Computer and other electronic equipment
  • Travel and entertainment expenses
  • Goods and services that add to quality to life, including furniture, TVs and videos
  • Athletic training and competitions
  • Personal care attendants

Establishing a special needs trust or Supplemental Needs Trust

The laws governing trusts are complex, can vary by state and are subject to change. New laws have considerably tightened the eligibility criteria for government benefits and thus have affected many aspects of the way trusts are drafted. Setting up a special needs trust requires coordinated planning with an attorney knowledgeable in special needs planning who can prepare a will and necessary trust documents.

Managing special needs trusts

There are many considerations when choosing who should oversee the administration of a special needs trust.  It is important to understand the impact that the trust will have on a beneficiary and to choose a provider that has experience with administration.

NFP Structured Settlements works with NFP trust administration company, NDC Advisors, to provide the services required to establish and maintain special needs and supplemental needs trusts.