Special Needs Trusts: A Guide for Protecting Your Child’s Future
If you’re raising a child with special needs, you’ve probably spent countless hours thinking about their future. What happens when you’re no longer around to care for them? How do you make sure they have the resources they need without jeopardizing the government benefits that are so critical to their well-being?
A Special Needs Trust can be the answer, but only if it’s set up correctly.
What Is a Special Needs Trust?
A Special Needs Trust is a legal tool that allows you to set aside money for your loved one’s care without affecting their eligibility for needs-based government benefits like Supplemental Security Income (SSI) and Medicaid.
Here’s the problem it solves: If your child with disabilities inherits money directly - whether from you, a grandparent, or anyone else - that money counts as their asset. If they have more than $2,000 in assets, they lose their SSI benefits. And losing SSI often means losing Medicaid, which can be devastating.
A properly structured Special Needs Trust holds the money for their benefit without it counting against them. They keep their benefits and have access to the trust funds for expenses that improve their quality of life.
What Can a Special Needs Trust Pay For?
The trust can pay for a wide range of things that enhance your loved one’s life beyond what government benefits cover:
• Medical and dental expenses not covered by insurance
• Therapy, rehabilitation, and training programs
• Personal care attendants
• Transportation, including vehicle purchase and modifications
• Education and job coaching
• Recreation, entertainment, and hobbies
• Travel and vacations
• Electronics, computers, and phones
• Home furnishings and personal items
• Professional services like care management
The key is that trust funds supplement government benefits, but they don’t replace them. The trust shouldn’t pay for food and shelter in ways that would reduce SSI benefits, but there are strategies to navigate even those areas.
Protecting Waiver Eligibility in Kansas and Missouri
If your child is on a developmental disability waiver waiting list in Kansas or Missouri, protecting their financial eligibility matters. Both states assess whether your child meets the $2,000 asset limit when services become available. If assets exceed this limit, your child won’t qualify.
During the wait, a grandparent might leave an inheritance, someone might name your child on a life insurance policy, or a relative could open a custodial account. These well-intentioned gifts create countable assets that can disqualify your child from services.
Establishing an unfunded Special Needs Trust before receiving any assets protects inheritances and gifts without jeopardizing waiver eligibility. Both Kansas and Missouri law recognize this preventive approach as an effective way to preserve access to services while providing for your child’s future.
Getting Started
Creating a Special Needs Trust isn’t something you want to do on your own. Benefit rules are complex and change over time. State laws vary. An experienced attorney can help you create a plan that:
• Protects your child’s benefit eligibility
• Provides for their needs beyond what benefits cover
• Chooses the right trustee structure for your family
• Coordinates with your overall estate plan
• Adapts to your child’s changing needs over time
Martin Pringle's estate planning attorneys understand the unique challenges families with special needs face. We can help you create a comprehensive plan that protects your child’s benefits, provides for their future, and gives you peace of mind.
Contact our office to schedule a consultation.
