Which trust is designed to hold assets for a disabled person while preserving eligibility for means-tested government benefits?

Which trust is designed to hold assets for a disabled person while preserving eligibility for means-tested government benefits?

• A. Bypass trust
• B. QTIP trust
• C. Special needs trust (SNT)
• D. A/B will

Answer: (C)

Special needs trusts are built to keep assets out of the disabled person’s own name while still allowing access to funds for the person’s care and quality of life. By placing assets in a trust and naming a responsible trustee, the beneficiary can receive distributions for supplemental needs—things that government programs don’t fully cover—without these assets counting against the means-tested limit for programs like SSI or Medicaid. The trust is typically irrevocable, which helps prevent the assets from being treated as the beneficiary’s own for eligibility purposes. If the trust is funded with the beneficiary’s own assets, there may be a Medicaid payback provision after death; if funded by others, there isn’t. In contrast, bypass trusts, QTIP trusts, and A/B wills serve different goals (estate tax planning, spousal rights, or conditional bequests) and aren’t designed to preserve means-tested benefit eligibility.

Special needs trusts are built to keep assets out of the disabled person’s own name while still allowing access to funds for the person’s care and quality of life. By placing assets in a trust and naming a responsible trustee, the beneficiary can receive distributions for supplemental needs—things that government programs don’t fully cover—without these assets counting against the means-tested limit for programs like SSI or Medicaid. The trust is typically irrevocable, which helps prevent the assets from being treated as the beneficiary’s own for eligibility purposes. If the trust is funded with the beneficiary’s own assets, there may be a Medicaid payback provision after death; if funded by others, there isn’t. In contrast, bypass trusts, QTIP trusts, and A/B wills serve different goals (estate tax planning, spousal rights, or conditional bequests) and aren’t designed to preserve means-tested benefit eligibility.