As its name implies, a special needs trust is one that you set up for the benefit of someone with special needs, such as your child.
FindLaw explains that once established, you then place the following types of assets into the trust:
- The Medicaid and/or Medicare benefits your child currently receives
- The SSI benefits (s)he currently receives
- The housing subsidies (s)he currently receives
- The educational subsidies (s)he currently receives
- The employment subsidies (s)he currently receives
Because the special needs trust now owns all of your child’s benefits rather than him or her owning them personally, this in effect “impoverishes” him or her. This is a good thing because it insures that (s)he not only remains eligible for his or her current benefits, but also will be eligible for other federal or state benefits that may become available in the future.
Another advantage to a special needs trust is that you can name yourself as the trustee. If you do, you will continue to control your child’s assets and their disbursement for his or her benefit as you do now. But by naming a successor trustee, you ensure that if you become too ill, disabled or otherwise incapacitated to manage the trust assets yourself, your designated successor trustee will immediately step into your shoes and continue providing for your special needs child in a seamless fashion.
Remember, all the trust assets and the income they produce must go only for the benefit of your special needs child since (s)he is the only beneficiary of the trust. The successor trustee therefore cannot yield to any temptation to use them for his or her own benefit.