Who Needs a Special Needs Trust?

special needs trusts
A special needs trust is a trust formed for a disabled individual that allows the individual to shelter his or her financial assets while still being eligible for government benefits such as Supplement Security Income (SSI) and/or Medicaid.  The trust enables the individual to use government benefits to provide for basic needs of life while allowing the trust assets to provide for the extra or supplemental needs of life.

How Does It Work?

SSI and Medicaid have very strict financial criteria that a disabled person must meet before being eligible for any government assistance.  In essence, the disabled person must be at a severe poverty level to qualify for assistance.  However, in certain circumstances, the disabled person’s assets may be placed into a special needs trust.  The assets placed in this trust are not viewed or counted by SSI and Medicaid in determining if the disabled individual meets the eligible criteria.  This means that SSI and Medicaid may view the individual as being at the required poverty level and award benefits.  The money in trust, if spent according to federal and state regulations, may be used to pay for things the disabled individual needs.  This allows the individual’s money to be stretched out for many years to provide for things that are needed.
For example:  Mark has a brain injury from an automobile accident and would qualify for government assistance except for the legal settlement of $100,000 that he received.  Mark has a choice.  He can either spend the $100,000 and apply for government benefits or he can place the money in trust, apply for government benefits, receive benefits that he can use to cover daily expenses and medical care, and allow the assets placed in trust to cover the things that his benefits cannot cover.
If Mark chooses to use his money until it is gone and then apply for benefits, he will be paying for his medical care and all needs from his money until it is gone.  Conversely, if he places the money into the special needs trust, Medicaid can cover his medical expenses and SSI can assist with other needs.  The assets in trust are then used for extra things such as phone bills, gas, clothing, computers, televisions, therapies not covered by Medicaid, etc.
In certain states, a special needs trust can also shelter the “spend-down” that is often required before the elderly qualify for Medicaid in a nursing home.

Who Is Eligible For A Special Needs Trust?

Special needs trusts are available for a wide variety of people:

  • Life-Long Special Needs – Special needs trusts are most commonly used for individuals whose disabilities last a lifetime. These are types of disabilities that qualify for immediate government assistance, such as Down Syndrome, chronic mental illness, cystic fibrosis, blindness, and others.
  • Injury or Worsening Conditions – There are many individuals who may need government assistance down the road due to a tragic injury or a worsening condition. These people may qualify for a special needs trust. Examples include (but are not limited to) arthritis, muscular dystrophy, and multiple sclerosis.
  • Conditions Disabling Judgment – For people with disabilities that affect judgment, government assistance may never be needed; but, if the condition is severe enough to cause the person to be considered disabled, a special needs trust is important. Examples of conditions: bipolar disorder and mild autism.
  • Alzheimer’s/Dementia or other Conditions Requiring Skilled Nursing Care – Individuals in a skilled nursing facility may be allowed to place their assets in a pooled special needs trust (this is determined by state Medicaid rules).  In states where this is allowed, Medicaid can pay for the monthly nursing home care while the trust assets can be used to pay for clothing, an upgrade to a private room, toiletry items, and many other needs the person has that are not covered by Medicaid.

(Have questions? Get answers about special needs trusts.)

Why Choose Alabama Family Trust?

Alabama Family Trust is a pooled non-profit special needs trust company that was created by state legislation.  Alabama Family Trust is experienced in managing special needs trust in a cost effective manner and enabling individuals with disabilities to use their assets for their needs in the best manner to preserve and maintain quality of life.
Do you still have questions about Special Needs Trusts? Contact us today!

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Contact Alabama Family Trust via the contact link below to learn more about special needs trust funds.

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