A special needs trust is a legal document that aims to benefit people with disabilities. This is created to ensure that beneficiaries with mental and physical disabilities continue to enjoy the property given to them as an inheritance or gift. Also called a supplemental needs trust, this document can become part of a last will and testament.
In the United States, Congress gave the special needs trust an official legal status in 1993. At that time, amendments were made to the Omnibus Budget and Reconciliation Act (OBRA-93) that included an exception authorizing the use of special needs trust for the benefit of people below 65 years old and those with disabilities based on the social security standards.
This supplement trust then allowed beneficiaries to have unlimited assets held in their trust. However, these assets may not be used as qualifications for beneficiaries to avail of certain government benefits such as supplemental security income, subsidized housing and Medicaid.
With the special needs trust, a person with disability is guaranteed to have supplemental care apart from that which he or she benefits from the government. This is often used in receiving inheritance or proceeds from a personal injury and insurance settlements or compensation for criminal injuries.
Trusts are often managed by family members or trustees whom the court appoints. Careful selection, however, is normally done in cases where the special needs trust is executed for a young person or disabled child. When setting this up, a structured settlement planner is involved along with a team composed of legal and financial experts.