Special Needs Trust
A trust designed to provide for a person with disabilities without disqualifying them from government benefits like Medicaid and Supplemental Security Income (SSI). The trust pays for supplemental needs beyond what government programs cover.
Legal Definition
A trust established for the benefit of a disabled beneficiary, drafted to comply with 42 USC ยง1396p(d)(4), that supplements rather than supplants public benefits by restricting distributions to goods and services not provided by government programs.
Practical Example
Parents of a child with Down syndrome create a special needs trust. The trust pays for vacations, a personal aide, entertainment, and other extras, while the child continues to receive Medicaid health coverage and SSI payments.