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A special needs trust is a valuable financial option for certain individuals and families, but the details can seem daunting. Special needs trusts are established to work with need-based programs—they’re intended to help pay for necessities that government benefits don’t cover. These trusts can be established in certain scenarios for any person with special needs or disabilities. There are several reasons to open a special needs trust, and doing so can greatly assist the beneficiary—read about some of these reasons and advantages below.

Preservation of governmental benefits

Earmarked for the beneficiary (the individual with disabilities), the capital in a special needs trust is the legal resource of the trust. The beneficiary is not seen as the owner of the funds, and they aren’t able to control the assets, which are managed by the trustee. Because of the way the funds are owned and managed, the beneficiary will not lose any government benefits such as Medicaid or Supplemental Security Income (SSI). Both of these programs require a very low income and limited resources. A special needs trust is meant to act as supplemental income for any needs the government does not cover.


Most often, the guardians of an individual with disabilities start a special needs trust to protect the individual and to provide for them without jeopardizing the individual’s current or future qualifications for government aid programs. This trust is also a popular option for leaving assets to a person with special needs in a will. Depending on the circumstances, a trust may also be opened after a special needs trust lawsuit settlement occurs.Any lump sum of money can incur a great amount of taxes and disqualify individuals with special needs from necessary benefits. However, if a person with special needs comes into settlement money from a lawsuit, the funds can be put into a special needs trust to bypass taxes and maintain benefits.

Asset protection

Another benefit of a special needs trust is that it protects the assets from creditors. The money in a special needs trust cannot be controlled by anyone other than the trustee, and it’s unable to be seized. This means that if the beneficiary is ever sued or goes through a divorce, the funds in the special needs trust will remain safe.

If your client is considering a special needs trust or would like to learn more about the benefits of opening one, contact Milestone Consulting today.