Special Needs Trust

Special needs trusts (SNT’s) are a vitally important vehicle for protecting the quality of life for individuals with disabilities, particularly those that also receive certain types of government assistance. Many government benefit programs have income and asset eligibility provisions, and thus special needs individuals can unintentionally and arbitrarily become disqualified when their situations change for a variety of reasons.

Funding assets for SNT’s often come from personal injury settlements, and while on the surface these settlements may appear like a windfall for victims, they can often spell disaster for those rendered ineligible for supplemental government benefits who are then forced to live off said settlement for the rest of their lives. Sadly, this trouble is worsened by rising health care costs and the unique expenses that can come with being disabled. Our SNT allows individuals to keep their government benefits while using their trust to directly pay for the additional care that they need. The SNT also makes provisions for supplemental needs not covered by their benefits or insurance such as special vans with lifts, certain medical procedures, travel to visit relatives, and various types of school and entertainment.

All SNT distributions must pass a three-part test:

1. The distribution must not affect the Beneficiary’s government benefits
2. The distribution is financially prudent
3. The distribution is for the benefit of no one other than the Beneficiary.

The Directed Benefits Foundation offers beneficiaries and families a total planning process:

• Ensuring present and future cash flow needs are satisfied
• Navigating complex government benefit and eligibility guidelines
• Enriching life by using trust assets for quality-of-life improvements such as physical accessibility, education, and recreation.

In most cases, this simply means that cash cannot be paid to the Trust beneficiary because cash will count as income under the eligibility rules for most public benefit programs. This is true even when the same cash does not count as income for tax purposes.

However, this challenge can be easily overcome by simply paying vendors and service providers directly. In other words, giving money to a Trust beneficiary for the payment of a bill will result in countable income for purposes of public benefit eligibility but paying the same bill directly from the Trust will not result in countable income. What this means is that a special needs trust can comply with this technical requirement by simply providing the Trust beneficiary with the convenience of a bill paying service.

The Directed Benefits Foundation has extensive experience administering SNTs so they comply with all technical requirements for Trust beneficiaries. DBF also has extensive disbursement experience with a broad variety of purchases.

Call us today if you are establishing a special needs trust and are interested in the services of a knowledgeable Trustee.