When planning your estate, consider how to provide for loved ones with special needs. A special needs trust (SNT) helps you support a beneficiary with disabilities without affecting their eligibility for government benefits. Knowing who qualifies for a special needs trust is key to making the right decisions.
What is a special needs trust?
A special needs trust allows you to set aside assets for someone with disabilities. The trust covers expenses that government programs like Medicaid or Supplemental Security Income (SSI) don’t. This may include medical care, education, and recreational activities. By using a special needs trust, you ensure your loved one receives extra support while keeping access to essential benefits.
Eligibility requirements
The beneficiary of a special needs trust must have a disability as defined by federal or state law. This typically means having a physical or mental impairment that significantly limits major life activities. The disability must also last for at least a year or result in death.
Types of special needs trusts
Connecticut offers two main types of special needs trusts: first-party and third-party.
A first-party special needs trust uses the beneficiary’s own assets. This may be money from an inheritance, personal injury settlement, or savings. The beneficiary must be under 65 years old when creating the trust. After the beneficiary’s death, any remaining funds in the trust might go toward repaying the state for Medicaid benefits.
Someone other than the beneficiary funds a third-party special needs trust. This may be a parent, grandparent, or another family member. There’s no age limit for setting up this type of trust. Additionally, any remaining assets after the beneficiary’s death can go to other family members or according to the trust’s terms.
Taking care of your loved ones
Setting up a special needs trust helps you provide financial support for a loved one with a disability. By understanding the eligibility requirements and the different types of trusts, you can create an estate plan that ensures your loved one’s future remains secure.