An Overview of Special Needs Estate Planning

There are several types of trusts to assist with the special challenges of special needs planning. The most common types are Support Trusts and Special Needs Trusts.

Support Trusts

Support Trusts require the Trustee to make distributions for the child's support in areas like food, shelter, clothing, medical care, and educational services. Beneficiaries of Support Trusts are not eligible to receive financial assistance through Supplemental Security Income (SSI) or Medicaid. If your child will require SSI or Medicaid, you should avoid a Support Trust.

Special Needs Trusts

For many parents, a Special Needs Trust is the most effective way to help their child with a disability. A Special Needs Trust manages resources while also maintaining the child's eligibility for public assistance benefits. Special Needs Trusts are a critical component of your estate planning if you have loved ones with disabilities for whom you wish to provide after your passing. Generally, Special Needs Trusts are either stand-alone trusts funded with separate assets (like life insurance) or they can be sub-trusts in existing living trusts.

There are two types of Special Needs Trust:

Third-Party Special Needs Trust

Created using the assets of the parent(s) as part of an estate plan; distributed by a Will or Living Trust.

Self-Settled Special Needs Trust

Generally created by a parent, grandparent or legal guardian using the child's assets to fund the Trust (e.g., when the child receives a settlement from a personal injury lawsuit and will require lifelong care). If assets remain in the Trust after the child’s death, a payback to the state is required, but only to the extent the child receives public assistance benefits.

We Can Help

We welcome you to contact Legacy Law Center with your questions about special needs planning and for more information about our special needs planning services.