A person can have special needs as the result of a variety of situations. A disability could be genetic, occur at birth or be the result of a catastrophic accident. Regardless of how a Massachusetts resident became disabled, he or she may be entitled to assets through an inheritance, a settlement or some other means. Using a special needs trust to hold those assets can provide unique protections for the disabled person.
Family members’ hearts are often in the right place when they leave an inheritance, but it could jeopardize any potential for the receipt of government benefits. The same risk also exists when a settlement or some other asset is received. Putting assets into a special needs trust means that they will not be considered as income when applying for benefits.
Even if a Massachusetts resident does not currently need benefits, the need may arise in the future. The trustee of a special needs trust has complete control of the assets. Distributions are not made directly to the beneficiary. Proceeds of the trust may be used to directly pay the beneficiary’s expenses. This will keep the option of applying for government benefits and programs in the future a possibility.
Several legal requirements need to be met in order to ensure that a special needs trust is considered valid. Therefore, it is inadvisable for anyone to execute such a trust without making sure that it complies with all of the necessary federal and state laws. Otherwise, none of the good intentions in the world may be able to undo the damage that could be caused to the disabled person.
Source: FindLaw, “Special Needs Trusts FAQ’s“, Accessed on July 27, 2015