VanAntwerp Attorneys, LLP
Phone: 606-618-0698

Special needs trusts

To someone in Kentucky who is suffering from a disability, qualifying for public benefits may be essential for receiving the medical and other assistance necessary. However, eligibility depends on falling below a certain income limit. According to CNBC, setting up a special needs trust allows parents or guardians to designate a regular income for their disabled family member to take care of expenses that federal assistance may not cover, such as eyeglasses or dental work.

Although a special needs trust is designated to provide for a disabled person, the money typically is not sent directly to him or her. Instead, a trustee distributes the funds to take care of specific expenses so that the beneficiary does not have the income to report, and eligibility for benefits such as Supplemental Security Income and Medicaid are not in jeopardy. Money from a third party such as a parent's retirement account may be used to fund the trust. If the funds belong to the beneficiary, it is a first party trust, and after he or she dies, the amount received through federal benefits must be paid back.

The National Law Review reports that two words have changed this type of trust drastically and made it available to a new population. Now, an adult who is receiving disability benefits, and who is considered mentally competent, does not have to go to court or rely on a family member or guardian to establish a special needs trust. Under the Special Needs Trust Fairness Act, those who have assets and income that exceed the maximum may set up their own, and manage the funds themselves.

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