Special Needs Trust

Special Needs Trusts ensure that individuals who are physically disabled or mentally challenged can have the use of property held for their benefit. Many families face the challenge of trying to preserve and protect assets for the care of an incapacitated family member.  The Special Needs Trust (SNT) is specifically designed to help the beneficiary avoid losing essential government benefits that they are currently receiving or they may receive in the future, such as Medicaid, SSI and mental health benefits.  This is a unique feature as most traditional trusts are considered available assets, or a countable resource, for SSI and Medicaid qualification purposes, and therefore may reduce or eliminate the amount of government assistance the individual may receive.  For this reason it is critical the SNT be drafted carefully by an experienced Trust and Estates attorney.  Special Needs Trusts also serve to protect the assets of the incapacitated person.

There are three types of Special Needs Trusts; all three must be irrevocable:

• Common Law Special Needs Trust - also known as Third Party Special Needs Trust, is funded by anyone other than the disabled individual with assets not belonging to or owned by the disabled beneficiary.  There is no pay back rule for a Third Party Special Needs Trust.

• Self-Funded or Payback SNT - is funded using the beneficiaries own assets and must be created by the beneficiary’s parent, grandparent, guardian or a court.  The beneficiary must be an individual under the age of 65.  This SNT must state that upon the death of the beneficiary the State is repaid for the medical assistance it has provide to the beneficiary during his or her lifetime. 

• Pooled Trust - may be created by anyone, but a non-profit fiduciary must be the trustee. Any trust residue must remain in trust for the benefit of other disabled individuals.

A SNT can be an invaluable tool to help families provide the best possible care and quality of life for a loved one.  With proper planning and drafting a SNT can improve the level of medical treatment, rehabilitation, education, dietary needs, equipment and travel available for the beneficiary. The Haverford Trust Company serves as trustee for Special Needs Trusts.