Estate planning looks different to everyone. While the collective process is important, an experienced estate planning attorney will be able to discern whatâs not needed as easily as what should be included. For some a supplemental needs trust, or special needs trust, as itâs sometimes referred to, plays an important role for those with family members who have long term needs or who are disabled. This legal document is sometimes part of a clientâs last will and testament; other times, itâs treated as a confined event or need outside of estate planning. Only in the past two decades have they been recognized by Congress, though theyâve been used for many years. These trusts enable a person with a mental or physical disability, or with someone with a chronic illness, to have resources protected for his or her current and future care. In most instances, when theyâre properly prepared, these resources arenât considered assets for the purpose of qualifying for any type of government assistance. This is one reason why a qualified estate planning or Medicaid attorney is so important. Special needs trusts can include â though theyâre not limited to:
- Supplemental Security Income, or SSI
- Medicaid
- Housing subsidies, and more
In order to qualify for a supplemental or special needs trust, the person must be deemed impoverished. This happens provided his personal assets do not exceed $2,000. Itâs important to understand that the assets in the trust do not apply to the $2,000 limit. The trust is designed to cover those needs that any government subsidies do not provide. Many assume these trusts are designed to cover only the necessities; in fact, theyâre used to better the lives of those who rely on them. The assets can be used for travel, dinners, movies and much more.
There are Medicaid rules that say these trusts can be used for very narrow purposes, itâs important each person understands what that means. There are no restrictions for those wishing to modify their home or buy a home with easier access for things such as wheelchairs. The trusts certainly cover those expenses. Similarly, there are certain âfood purchasesâ that are not allowed; however, dinner parties, vacations and entertainments are permitted. As mentioned, these have been recognized by Congress for just twenty years.
When Congress put the law into place, it did so through an exception for Omnibus Budget and Reconciliation Act, or OBRA. Through this avenue, the approved use of these trusts widened to include anyone â even those under the age of 65. Itâs also important to note that Supplemental Needs Trusts, even if theyâre part of an estate plan, are distanced via its own Federal Identification Number (Employer Identification Number) issued by the IRS. That FIN can be either the beneficiary or grantorâs social security number. Theyâre designed to be irrevocable, which is yet one more reason why an attorney is strongly recommended. Amendments to the trust are sometimes allowed, but it depends on each case, state laws and any changes to federal laws. To learn more about these important trusts, contact our office. Weâll explain their uses, any potential âroadblocksâ and will answer all of your questions.
- Young Families Estate Planning in Vermont - May 5, 2026
- 8 Vermont Medicaid Myths Seniors Need to Understand - April 30, 2026
- Things to Consider If Someone in Your Estate Plan Is Not a U.S. Citizen - April 23, 2026
