Planning for a Loved One with Special Needs: How a Trust Can Protect Their Future
Caring for a family member with special needs brings both love and responsibility. There are daily concerns, long-term goals, and constant questions about how to make sure they are supported, secure, and safe — not just today, but well into the future.
At Fletcher Estate Planning, we work closely with families facing these challenges. A Special Needs Trust is one of the most powerful tools available to protect benefits, preserve dignity, and provide financial support without putting government assistance at risk.
What Is a Special Needs Trust?
A Special Needs Trust, often called an SNT, is a legal structure that allows assets to be set aside for someone with a disability without disqualifying them from programs like Medicaid or Supplemental Security Income (SSI). The trust holds and manages those assets, but the money does not belong directly to the individual. That distinction is key.
Without this structure, even a modest inheritance or legal settlement can disqualify someone from benefits they rely on. A Special Needs Trust helps prevent that outcome.
What Makes These Trusts So Effective?
They preserve access to benefits.
Government programs that provide health coverage or income support often have strict asset limits. Anything over the threshold can result in denial or interruption. Because assets inside an SNT are not counted as the beneficiary’s own, those vital benefits remain intact.
They allow for meaningful support.
Funds from a Special Needs Trust can be used for many things that improve the person’s quality of life. This might include out-of-pocket medical care, therapy, education, travel, hobbies, assistive technology, or even just basic comforts. The trust cannot pay for food or housing directly in most cases, but it can enhance the life built around those essentials.
They shield the funds from creditors.
Generally, the money inside a Special Needs Trust is protected from lawsuits and creditors. That means more security and fewer risks of the trust being drained unexpectedly.
They come with oversight.
Every trust is managed by a trustee. This might be a family member, a professional fiduciary, or a financial institution. The trustee controls how the funds are used and is legally bound to act in the beneficiary’s best interest.
Different Types of Special Needs Trusts
First-Party Trust
This type is created using the beneficiary’s own money. It may come from a personal injury settlement, an inheritance received outright, or saved income. Because the money originally belonged to the person with special needs, the trust must follow strict rules. After the beneficiary’s death, Medicaid is typically reimbursed for any care provided.
Third-Party Trust
This is funded by someone else — a parent, grandparent, or other loved one. Since the assets never belonged to the beneficiary, Medicaid payback rules usually do not apply. This type of trust can be used during the donor’s lifetime or created as part of their estate plan.
Pooled Trust
Operated by a nonprofit, pooled trusts combine resources from multiple individuals into one large investment fund. Each person still has a separate account, but management is handled professionally. These trusts can be a good option for those without a suitable individual trustee or for smaller amounts that need oversight.
What to Think About Before Setting One Up
Choose the right trustee.
The person managing the trust should be someone responsible, organized, and fully committed to acting in the beneficiary’s interest. They need to understand the rules, communicate clearly, and stay on top of changing needs.
Make sure it complies with the law.
Special Needs Trusts must follow state and federal requirements. These rules affect how the trust is written, how it functions, and whether benefits remain protected. Mistakes can be costly. Work with an attorney who understands this area inside and out.
Know how it will be funded.
Cash, investment accounts, property, life insurance — all are potential funding sources. Some families fund the trust gradually. Others wait until after death through their estate plan. Either way, the structure should be in place before the funds are needed.
Review the plan over time.
Needs change. So do laws, family relationships, and financial circumstances. A trust created when a child is ten may not fit when that child turns thirty. Regular updates keep the plan strong and relevant.
Final Thoughts
Setting up a Special Needs Trust is one of the most thoughtful and protective things you can do for someone who depends on lifelong support. It provides structure, stability, and peace of mind — not just for you, but for the person you love.
At Fletcher Estate Planning, we help families make these decisions with clarity and care. If you have questions, or if you’re ready to begin, we are here to guide you through every step. Your loved one deserves a plan that works, and we are here to help you build it.
