A disabled person who receives monthly income from a personal injury claim settlement (often from the same personal injury that caused their disability) often will not qualify for certain means-tested government assistance programs. Likewise, an elderly parent with a disabled adult child may not be able to leave an inheritance for the child without the amount of the inheritance disqualifying that child from continuing to receive certain forms of government assistance that this child desperately needs. In these situations, a properly drafted Special Needs Trust (SNT) often is the best solution as assets and income placed into the SNT do not count toward determining a person’s eligibility for certain means-tested government benefits. However, even when there is a properly drafted Special Needs Trust satisfying all the formal legal requirements, it is important to ensure that all the assets placed in the trust are administered properly. For if the Trustee fails to comply with all of the specific legal requirements governing distributions from the trust, then the beneficiary still may be disqualified from receiving certain forms of means-tested government assistance even when there is a SNT already in existence. Consequently, it is important that the Trustee always obtain legal advice and counsel before making any distributions from the Special Needs Trust.
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