For families with a loved one who has a disability, understanding how a special needs trust affects Supplemental Security Income (SSI) is necessary. SSI provides essential financial support, and ensuring that other assets do not interfere with it is a top priority.
Understanding special needs trusts
A special needs trust is a legal arrangement that holds assets for a person with a disability without jeopardizing their eligibility for public benefits like SSI. The trust can pay for a variety of expenses that enhance the individual’s quality of life, such as:
- Medical care
- Education
- Personal items
- Travel and entertainment
Properly setting up a special needs trust ensures that it does not affect the beneficiary’s SSI benefits. Choosing the right type of special needs trust, whether a first-party or third-party trust, is important, as each has different rules and implications for SSI.
Protecting SSI benefits
SSI is a means-tested program, meaning eligibility depends on the individual’s income and resources. By placing assets in a special needs trust, you can protect these resources from getting counted toward the SSI resource limit.
This protection ensures that your loved one can maintain their SSI disability-related benefits while still enjoying a higher quality of life. It is important to ensure that you set up an irrevocable trust, as revocable trusts may still count as resources, potentially affecting SSI eligibility.
Ensuring long-term security
Establishing a special needs trust is a crucial step in securing your loved one’s financial future. By thoughtfully managing assets, families can prevent complications that might otherwise lead to financial hardship, ensuring that their loved one has support and care in the years ahead.
