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Special Needs Trusts: What They Do and How They Work

4 min read

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By Thomas Rosen

A special needs trust can help provide financial support for a loved one who relies on needs-based programs. Learn more about how these trusts work.

Parents who have a child who has a disability often wonder how they can ensure their child is cared for after they pass away. There are many options available to make this happen. One of these is a special needs trust. This type of trust provides very specific benefits for the child to help parents feel they’ve done their best to ensure the child will be taken care of long term.

What Is a Special Needs Trust?

A special needs trust is an irrevocable trust, which means that it can’t be changed or canceled once the trust is established. The beneficiary never has control of the trust because there is always a trustee to oversee its contents. The trustee distributes the trust in accordance with the beneficiary’s needs.

Since the beneficiary doesn’t have direct control or access to the trust, the value of the trust can’t be counted as an asset for them when they apply for needs-based programs. This means that what’s in the special needs trust won’t have any impact on being able to receive Medicaid or Supplemental Security Income.

The special needs trust enables the person to keep getting the services they need. For many people, this is valuable because the total value of the trust might not be enough to provide them with continued care.

What Are the Limitations of a Special Needs Trust?

Special needs trusts can only be used to cover certain expenses, and must be written in a specific manner that clearly denotes what it can and can’t be used for. Typically, these trusts are used to provide supplemental assistance for the beneficiary. This can cover things like entertainment and food expenses. It can also cover some items that other insurance won’t pay for.

You can ask your attorney to review what this means for this case. Reviewing a sample special needs trust might also be beneficial to you. This is a chance for you to see exactly what wording and limitations are present in this estate plan component.

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What Types of Special Needs Trusts Are Available?

Once you determine that you need to establish a special needs trust, you’ll need to discuss the specific type you should start. There are some vast differences between these types, so be sure to review your options with your lawyer and consider which one would work best for your loved one.

What Else Should You Know About Special Needs Trusts?

The special needs trust is only one aspect of your estate plan that you need to think about when you have a dependent who may need special care after you’re not able to provide it any longer. Your attorney can provide you with detailed information about what options you have to make sure you have as many aspects of their care covered as necessary.

Something else to consider is who will take on your role as guardian. You should determine whether you have the legal capability to name a guardian who can step in and provide care for your dependant when you pass away.

Estate Planning

You should also ensure that other aspects of your estate plan are in place. This can help the individuals who will help your disabled child after you pass away to know what plans you have. These include:


This outlines who receives the assets that aren’t covered under trusts or payable on death designations.

Payable on death designations

These tell financial institutions who to turn your accounts over to when you die.

Power of attorney

You can name a person to make medical decisions and one to make financial decisions for you if you become incapacitated and unable to make those on your own.

Living will and advance directives

Your wishes for medical care, including what procedures you’re willing to have and unwilling to have are covered here.


Your attorney can help ensure that your wishes translate to a legally binding plan. Be sure to discuss your wishes for your child with special needs with your attorney so they can provide you with guidance that adheres to your state’s requirements.

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Thomas Rosen



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