Special Needs Trusts are created to ensure that beneficiaries who are developmentally disabled or mentally ill can receive inheritances without losing access to essential government benefits.
They are frequently founded from the proceeds of compensation for criminal injuries, litigation or insurance settlements. The use of a private discretionary trust can not only be more efficient in terms of taxation and access to government benefits but can also allow for more efficient investment of funds held than where funds are held by a court official (the Official Receiver in England and Wales).
The SpecialNeedsTrust can be used to provide for the needs of a disabled person to supplement benefits received from various governmental assistance programs including SSI and Medi-Cal. A trust can hold cash, personal property, or real property, or can be the beneficiary of life insurance proceeds.
Specialneeds refers to the requisites for maintaining the comfort and happiness of a disabled person, when such requisites are not being provided by any public or private agency.
Specialneeds can include medical and dental expenses, annual independent check-ups, equipment, programs of training, education, treatment, and rehabilitation, eye glasses, transportation (including vehicle purchase), maintenance, insurance (including payment of premiums of insurance on the life of the beneficiary), and essential dietary needs.
An appropriate SpecialNeedsTrust (Supplemental NeedsTrust in New York) must be drafted by legal counsel to comply with the Omnibus Reconciliation Act of 1993 [revised 42 U.S.C. 1396 p(d)(4)] and approved by the court as part of the settlement agreement or release.
As part of the trust agreement, the injured party may not own or have direct access to the trust fund, and the trust must be irrevocable.
Trust funds may not be used to provide for rent, clothing, or food, only for expenses not covered by entitlement benefits.
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