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  • Nicole J. Zuvich

How can establishing a trust help your special needs loved one?

Updated: Sep 27

If you have a child, sibling or other family member with special needs, you want to provide further assistance without jeopardizing the government benefits your loved one receives.

Establishing a trust may be the solution. As an estate planning attorney can explain, there are three primary special needs trusts for you to consider.

First-party special needs trust

Your loved one depends on the benefits available through Supplemental Security Income or SSI. However, to qualify, an SSI beneficiary cannot have more than $2,000 in his or her own name. This is a problem if your loved one receives a large inheritance or accident settlement. However, the government will continue to provide benefits if the extra funds are in a first-party special needs trust for use during the lifetime of the beneficiary. Any remaining assets reimburse the government for the beneficiary’s medical care costs when he or she dies.

Third-party special needs trust

Usually, family members who wish to help someone with special needs will contribute to a third-party special needs trust. This trust can hold assets of any kind, from stocks and bonds to real property. The assets in the trust are for the use of the beneficiary and do not affect his or her ability to receive SSI benefits. When the beneficiary dies, the remaining assets pass not to the government but to family members or to a charity.

Pooled trust

A nonprofit organization administers a pooled trust in which beneficiaries pool their resources for investment purposes. At the same time, each beneficiary maintains a separate account. Assets cover a beneficiary’s needs and supplement the government benefits he or she receives. As with the first-party trust, the funds remaining after the beneficiary’s death reimburse the government for medical care costs.

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