Legal structure
Special Needs Trust
A trust designed to supplement, not replace, government benefits for a beneficiary with a disability.
Typical purpose
To provide quality-of-life support while seeking to preserve eligibility for programs such as SSI or Medicaid.
How it operates
A trustee makes discretionary distributions for supplemental needs consistent with benefits rules.
Who might use it
Families of individuals with disabilities.
Assets commonly involved
- ◆Cash
- ◆Investments
- ◆Life insurance proceeds
- ◆Settlement proceeds
Potential advantages
- ◆Supplemental support
- ◆Professional oversight
Legal and tax limitations
- ◆Complex benefits rules
- ◆Payback provisions may apply
- ◆Distribution errors can affect eligibility
Establishment & administration
- ◆Specialized drafting
- ◆Knowledgeable trustee
- ◆Careful distribution records
Common mistakes
- ◆Making cash distributions directly to the beneficiary
- ◆Using a generic trust template
Questions to ask a professional
- ◆Which state's law should govern this arrangement, and why?
- ◆Who should serve as trustee and successor trustee?
- ◆How will the trust be taxed at the federal and state level?
- ◆What assets must be retitled, and who handles the transfers?
- ◆What ongoing records, filings, and reports will be required?
Educational information only. Trust law varies by state; consult qualified legal, tax, and financial professionals before acting.
Next step
Move from understanding to a properly reviewed plan.
Discuss a Special Needs Trust With TangierEducational information only. Not legal, tax, or investment advice.