A Special Needs Turst is a type of spendthrift trust that is used to provide benefits to an elderly or disabled person while not effecting the person's eligibility to receive certain types of "need-based" government programs such as SSI and Medi-Cal. The Trust provides money for the "special needs" of the person as a supplement to the assistance received from the government programs.
The "special needs" that the Trust covers can include education, training, transportation, insurance, medical expenses, treatment, rehabilitation, medical equipment, and other necessary expenses.
A Special Needs Trust must be irrevocable and the person who receives the benefits (the beneficiary) cannot control the amount of or frequency of the distributions. Because of this, the goverment does not include such Trust when calculating the assets of the person in order to determine eligibility for receiving the government assistance.
Special Needs Trusts are typically set up by parents who want to provide care for their elderly parent or disabled child without effecting that parent or child's ability to still receive government assistance. Also, an elderly or disabled person who expects to receive an inheritance, gift or large sum of money will set up a Special Needs Trust for himself so that he will not lose his government assistance once he receives the injeritance, gift or money. It is common for people to leave a diabled or elderly person money in a Will or Living Trust without knowing that such gift will cause the person to lose government benefits.