What Is a Special Needs Trust?

A Special Needs Trust (SNT), also called a Supplemental Needs Trust, is a legal tool designed to protect assets for a person with disabilities without jeopardizing their eligibility for government benefits, such as Medicaid or Supplemental Security Income (SSI).

The trust allows families to provide additional financial support for their loved one’s quality of life, covering expenses like education, therapy, medical equipment, transportation, and recreational activities — all without affecting public benefits.

Why Special Needs Trusts Are Important in North Carolina

Individuals with disabilities often rely on government assistance to meet daily needs. However, many public benefits programs limit income and asset eligibility. A Special Needs Trust ensures that a beneficiary can receive financial support from the trust without disqualifying them from critical government programs.

Benefits of an SNT include:

  • Protecting Eligibility for Government Benefits (Medicaid, SSI, etc.)
  • Providing Supplemental Financial Support beyond basic needs
  • Ensuring Long-Term Security for the beneficiary
  • Flexibility in how funds are used for healthcare, education, or enrichment

Types of Special Needs Trusts in North Carolina

  1. First-Party Special Needs Trusts
    Funded with the beneficiary’s own assets (such as an inheritance or personal injury settlement), these trusts must comply with federal Medicaid rules and often include a payback provision to reimburse the state upon the beneficiary’s death.
  2. Third-Party Special Needs Trusts
    Funded by family members or others, these trusts do not require repayment to the state and can be tailored to the family’s estate planning goals.
  3. Pooled Trusts
    Managed by nonprofit organizations, these trusts pool funds from multiple beneficiaries for investment purposes while maintaining individual accounts for distributions.

How Special Needs Trusts Work in North Carolina

  • A trustee is appointed to manage the assets and make distributions for the beneficiary’s supplemental needs.
  • The beneficiary retains government benefits eligibility, as funds in the trust are not counted as personal assets.
  • Distributions are used to enhance quality of life without replacing benefits provided by government programs.

Why You Need a Special Needs Trust Attorney

Creating a Special Needs Trust in North Carolina requires careful legal drafting to ensure compliance with federal and state regulations. An experienced attorney can:

  • Advise on the appropriate type of SNT for your family’s needs
  • Draft a trust document that protects assets and preserves benefits
  • Coordinate with other estate planning tools, including wills, revocable trusts, and Medicaid planning strategies
  • Serve as a resource for trustees managing the trust

Final Thoughts

Special Needs Trusts are essential for families who want to provide financial security for a loved one with disabilities while preserving access to critical government benefits. Proper planning ensures that beneficiaries can enjoy a higher quality of life without risking eligibility for Medicaid or SSI.

At Lohr Law Firm, we help North Carolina families create Special Needs Trusts tailored to their unique situations, providing expert guidance on estate planning, Medicaid planning, and long-term financial security.

Contact Lohr Law Firm today at (919) 348-9211 or evan@lohrnc.com to schedule a consultation and protect your loved one’s future.