A Special Needs Trust (also called a “Special Needs Agreement”) can be used by a parent or legal guardian to protect their minor child’s personal care and welfare while they become an adult who can take care of himself or herself. The purpose of a Special Needs Trust is to allow a minor child’s personal care and welfare to be protected without court intervention during their minority until they reach the age of majority when they no longer need another guardian.
You want to make sure your child is taken care of after you are gone. But, if your child has special needs, you have to be especially careful about what happens to the assets you leave for him. There are many ways that he could inadvertently disqualify himself from the public benefits he needs to survive and thrive. The good news is that there is a way to ensure that your child receives both the financial support and government benefits he needs: a Special Needs Trust (SNT).
A SNT is a legal document that names someone—called a trustee—to manage money for someone else—called the beneficiary. In this context, the beneficiary is an adult with special needs. When you set up an SNT, you name yourself as the trustee, so that you can control where the money goes during your lifetime. But if something happens to you or if you just get older and need help managing things, another person—a successor trustee—takes over and manages things for your child after you are gone.
When you create a Pennsylvania special needs trust for a loved one who has a disability, you help ensure that your loved one will continue to receive essential resources from the state without losing access to any inherited money. You can use this guide to determine whether you need to create a special needs trust in Pennsylvania and what steps you’ll need to take to do so.
A special needs trust is managed by a trustee, who is responsible for handling all aspects of the special needs trust—including making distributions, filing taxes, and more. The trustee should be someone who understands the beneficiary’s needs and will act in their best interests at all times.
The beneficiary never has direct access to the funds in their special needs trust. Instead, they are used to pay for items not covered by government assistance programs like Medicaid.
A trust is simply a legal relationship between two individuals or institutions called the “grantor” or “settlor” who creates the trust and the “trustee” who administers the trust. The grantor or settlor gives property to the trustee, who then manages that property for the benefit of one or more beneficiaries.
A special needs trust (SNT) is a specialized form of a living trust that allows you to provide assets for a disabled relative and still enable him or her to receive public benefits. If handled properly, an SNT can provide your loved one with resources to improve quality of life and can be established to last as long as is needed.
The trustee of an SNT must use all funds from the trust to provide for your loved one’s supplemental needs — such as health care, education and recreation — without affecting his or her eligibility for government benefits.