Future Planning

Supplemental Needs Trusts or Special Needs Trusts

What is a Supplemental Needs Trust?

A Supplemental Needs Trust (sometimes called a Special Needs Trust) is a legal document that provides a way for you to place a gift or inheritance into a fund rather than give it directly to your family member. This fund can be used to improve quality of life and avoid the loss of benefits.

Should I create a Supplemental Needs Trust for my family member with a disability?

Some government benefits such as SSI and Medicaid are given based on income and assets. If a person receiving this type of government funding directly receives money or other assets through a gift or inheritance, these benefits can be lost. When this occurs, the person must spend the assets until they are below the asset limit and then re-apply for benefits. Because people with developmental disabilities often have high medical and housing expenses, the additional money is spent very quickly.

A gift paid to a supplemental needs trust rather than an individual can avoid the loss of benefits. The gift can then be used for assistive technology that insurance does not cover, personal needs, recreation, and other resources that improve the person’s quality of life.

How do I create a Supplemental Needs Trust?

Work with an estate-planning attorney, and appoint someone you know and trust as trustee. You may serve as trustee of your family member’s finances, but in the event of your death, the trustee will begin managing and supervising the finances. You can provide detailed instructions to direct your trustees’ activities, which legally must be followed.

More information:

Click here to view the Maryland Developmental Disabilities Council’s guide: Planning Now: A Futures and Estate Planning Guide for Parents of Children and Adults with Developmental Disabilities.

The Arc of the U.S. publishes Future Planning Resources, a list of books, agencies and other resources that address financial and legal planning. Click here to view a copy.

For a list of legal resources and attorneys who are familiar with working with families of adults and children with disabilities, click here.