5 Reasons Why It Is Very Important to Be Setting Up a Special Needs Trust


A special needs trust helps people protect family members with special needs, whether physical or mental. These trusts can also ensure those who cannot handle their own finances have the resources they need.

The grantor of the trust—often parents, guardians, or grandparents—can structure the trust to select the beneficiaries such as children, relatives, other individuals, or organizations and ensure that they receive the trust’s benefits without overdrawing them. The trustee responsible for the trust can be a family member or a third party hired to act as the trustee.

However, many families may be uncertain if setting up a special needs trust or disability trust fund is right for them. Discussing the matter with a reputable attorney or trust company almost always reveals it is the right decision.

Let us take a look at five reasons why it is essential to set up a special needs trust.

Protect Beneficiaries’ Assets

One of the biggest reasons for establishing a special needs trust is to ensure its beneficiary is protected. When a special needs trust is established by a third party instead of the beneficiaries, the assets are protected in the event of a divorce or lawsuit. It can also receive child support payments and accumulate other assets to help children with special needs.

Defend Insurance Policy Benefits

Another instance when a special needs trust can provide protection for a disabled individual is when they are a beneficiary on an insurance policy. During a divorce, these policies are often looked at and reconsidered. However, when the benefits go to a special needs trust, this protects the recipient’s rights.

Help an Inheritor to Continue Receiving Government Support

Many government support programs such as Medicaid and Supplemental Security Income (SSI) are needs-based. Program users’ quantities and sources of income are considered, and their amount of support will be adjusted correspondingly.

If an individual inherits assets outright, they will often lose some government assistance, potentially offsetting any gain from the inheritance. If the inheritance exceeds $2,000, the individual may lose government assistance altogether for a time.

However, by directing the proceeds from any inheritance or life insurance policy into a special needs trust, the beneficiary will not risk losing their government support.

When assets are paid directly to the special needs trust, they are excluded from calculations to determine the amount of aid an individual is eligible for. Thus, people with special needs can continue receiving their government benefits like SSI while also receiving support from the trust.

Support Children Even After Your Passing

All parents of children with special needs are concerned about what will happen to their children after they are gone. However, with a special needs trust and a well-chosen trustee, you can be sure that your child will continue to be taken care of long after you are gone.

Ensure Assets Are Used Correctly

With proper structure and a well-chosen trustee, you can ensure that any assets are used correctly and will benefit the beneficiary for a long time to come. These trusts can limit the use of the benefits and ensure they will remain available to the beneficiary in the long term.

Final Thoughts

A special needs trust is an important and effective means to provide for the needs of anyone with physical or mental disabilities. This tool, along with a well-chosen trustee, can help ensure that the beneficiary is cared for even if the grantor is no longer capable of managing the trust. Visit serenitassnp.com for more information on how to proceed with special needs trust.