Trusts and Estates

A Special Needs Trust Can Help You Qualify for Other Benefits

Government programs such as Medicaid and Social Security help low-income disabled persons access essential medical and caregiver services. Ownership of even modest amounts of property or income can disqualify you from such programs. To address this problem, you can set up a special trust to preserve and manage your assets in a way that lets you (or your loved one) qualify for government assistance.

A Special Needs Trust

Your property and income can be placed in a "special needs trust" or a "supplemental needs trust" and you will still be eligible for Social Security Income and Medicaid benefits. This type of trust can be set up privately or by court order. In either case, someone other than the beneficiary must be appointed to act as trustee and manage the property. The beneficiary of the trust can receive government assistance for basic living needs, like medical care, housing, and food, while the trust pays for other needs, such as recreation and education.

Trusts Can Be Pooled

The property in a special needs trust can be combined with the property in other special needs trust, which is called a "pooled trust." This type of trust is particularly beneficial for individuals with smaller amounts of property and assets. A pooled trust is managed by a nonprofit association that can save you money because it provides professional trust administration services.

A Qualified Income Trust

In some states, Medicaid rules forbid the use of a special needs trust to qualify for benefits, such as long-term nursing home care. In these states, federal law permits the use of a Medicaid qualified income trust, commonly called a "Miller trust," instead of a special needs trust. A Miller trust is necessary if your income is higher than the amount allowed for Medicaid eligibility.

Compliance with Federal and State Law

When you apply for Medicaid or Social Security Disability, you must disclose any trust that is set up for your benefit. To qualify for benefits, the trust must comply with federal rules and guidelines, as well as any additional rules or guidelines used in the state where you live. State rules can vary significantly from one state to another. The amount of benefits you qualify to receive will vary depending on where you live.

A Trust Lawyer Can Help

The law surrounding special needs trusts is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a trust lawyer.

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