If you have a disabled child who’s receiving any federal or Massachusetts state government benefits, chances are, if you or anyone else leaves them an inheritance, they will become disqualified for those benefits. Any needs-based benefits such as Supplemental Security Income (SSI), MassHealth, or subsidized housing which imposes an income or asset limit on the individual receiving those benefits will see the inheritance as an asset that will disqualify the individual from those benefits for a certain amount of time or until the assets are spent down.

Government benefits however are notoriously underfunded and provides the individual with the minimum required to live. You, as a parent, want more for your child and that’s where a Special Needs Trust comes in.

A Special Needs Trust is a specific type of trust that is set up for disabled children usually by their parents or grandparents for their benefit. This trust will hold money or an inheritance for their benefit without disqualifying them from their government benefits. How is this accomplished? Well, the trust money is not controled by the child or individual receiving the income from it. They don’t get a say on when and how much they get. That decision gets left to a third party – a trustee. Since the child or individual has no control over the money, it is not considered a countable asset for governmental benefit purposes.

In doing your estate plan, think about any disabled children you might want to benefit and set up a Special Needs Trust for them. Also, if you know of any grandparent or aunt who is thinking of leaving money or property to your disabled child, let them know that leaving the money or property outright to them will disqualify them from government aid and that they should set up a Special Needs Trust as well.