If you are disabled or have a disabled family member or loved one, you can create a special needs trust. A special needs trust is a type of trust created to provide financial support and protection for individuals with disabilities in Pennsylvania.
Disabled individuals can receive inheritances, gifts, and other funds without losing the ability to also receive government benefits, like Medicaid or Supplemental Security Income (SSI), if they have this kind of trust, which is the primary benefit of this trust.
A disabled individual can fund their own special needs trust, either with their money, inheritances or sometimes personal injury settlements. These trusts are first-party special needs trusts.
In addition, someone other than the disabled person can fund the trust. For example, it could be the parents or grandparents of the disabled individual or any other person who wants to support the disabled individual. These trusts are called third-party special needs trusts.
The state has certain requirements to create and fund this type of trust, including:
- The beneficiary must have a qualifying disability under federal law.
- The trust must be irrevocable, and the purpose should only be for the benefit of the disabled person.
- The trust’s creator must appoint a trustee, who will have complete discretion over the distribution of the assets or funds in the trust.
Disabled individuals, some of Pennsylvania’s most vulnerable citizens, can benefit from this valuable tool, by protecting their eligibility for government benefits while providing supplemental support for their unique needs. They can maintain a higher quality of life without compromising access to government programs if they have a special needs trust.