The Role of a Special Needs Trust (SNT)

For many who are unable to work because of severe disabilities, government programs such as Supplemental Security Income and Medicaid provide critical benefits. These programs ensure access to health care and offer limited financial support for basic needs.

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However, these are means-tested benefits programs, meaning that the benefits are only available to those with demonstrated financial need. Significant income or an increase in personal assets from any source may pose a threat to eligibility. This can pose a challenge when a disabled person receives substantial assets in a lump sum, as may be the case with a personal injury lawsuit or an inheritance.

To avoid affecting benefits eligibility, it is important to ensure that any transfer of assets is properly structured. In many cases, establishing a special needs trust, also known as a supplemental needs trust, may be the most effective way to provide for the long-term care of a disabled person without undermining benefits eligibility.

There are two common types of special needs trusts:

OBRA trusts and third-party trusts. The appropriate type of trust depends on the original source of the assets.

• OBRA Trusts: To create an OBRA trust, the trust assets must come from the individual. For example, these assets may come from a legal settlement following a serious accident or from an inheritance.
• Third-Party Trusts: Third-party trusts are generally created with assets provided by family members or other loved ones.

In either case, the funds must be used for the benefit of the disabled person. Essentially, these trusts pay for supplemental care, above and beyond that which is provided by the government. For example, assets from a special needs trust may be used to modify a home if necessary for accessibility purposes.

These trusts must be carefully drafted to effectuate the intended purpose and to avoid conflicts with otherwise available benefits.

For more information regarding special needs trusts and the role these trusts can play in providing for a loved one, speak with a knowledgeable attorney who has experience handling trusts and estate planning.

Author Credentials: Ian is the founder and Editor-in-Chief of Disabled World, a leading resource for news and information on disability issues. With a global perspective shaped by years of travel and lived experience, Ian is a committed proponent of the Social Model of Disability-a transformative framework developed by disabled activists in the 1970s that emphasizes dismantling societal barriers rather than focusing solely on individual impairments. His work reflects a deep commitment to disability rights, accessibility, and social inclusion. To learn more about Ian's background, expertise, and accomplishments, visit his full biography.