In the past, families would oftentimes disinherit disabled family members from assets, giving them to a third party to “take care” of their special needs child.   Why? The thought was that if assets were left to a disabled child, it would disqualify them from the state or federal assistance. In 1993, Congress enacted new laws, entitling disabled individuals to derive the same estate planning benefits as non-disabled individuals. The law created Supplemental Needs Trusts, which enable you to leave any amount of money to a loved one who has special needs without affecting their eligibility for the state or federal benefits.

The law further provides the trust proceeds must be used to provide “luxuries” for the disabled individual he or she would not otherwise receive under the state and federal programs. “Luxuries” can include trips, computers, power wheelchairs, prosthetics, or other comforts not generally provided by the government.

A Supplemental Needs Trusts can be created by an individual with their own funds or be created by someone other than a disabled individual, typically a parent.

Each trust has its own rights and restrictions, but both—Supplemental Needs Trusts and Special Needs Trusts—ensure immediate qualification for federal and state (Virginia) benefits (such as Medicaid or Social Security Disability Income).

Please Note:  Without good planning, your inheritance to your special needs child will very likely disqualify them from state and federal assistance.  Let’s create a plan that works!