A Special Needs Trust (SNT) is an effective way for parents to help a child
with mental or other disabilities because it manages financial resources while
maintaining the child's eligibility for public assistance. Otherwise, if a
parent bought a home for their disabled child, the child would lose
governments benefits. A home bought through a trust is put in the trust's
name, and the needy person has a life-long lease on it. The downside is the
occupant does not own the home as an asset. It belongs to the trust.
Almost all states have SNTs, and the regulations in each may vary as long
as they comply with the federal mandate under which they were permitted."
One of the key factors is the amount of money beneficiaries can have in
their name," Gene Zonz, financial consultant at EDU tax advisors in
Toledo, Ohio, told Psychiatric News. "For example, in Ohio they
are allowed to have only $1,500 in personal assets, which could be in the form
of life insurance cash value, retirement plan, home, or car," he said.
Across the United States the average is $2,000.
Detractors claim that SNTs don't take care of the neediest and sickest and
don't help individuals without family resources. While homes are purchased by
families with sufficient means to fund the SNT and provide down payments,
others not so fortunate have the opportunity to live in group homes too. The
three other residents in Steven McGoldrick's home live rent free (see article
at left). For people who are not wealthy, a SNT trust is still a good idea
because parents can pool their resources to purchase a home. Funding can also
come from discretionary contributions while parents are alive, probate
distributions, a living trust, life insurance, a pension plan and other
The trust can be used to purchase a home or pay for furnishings, repairs,
utilities, and taxes. It can pay for recreation, trips, and even vacations for
residents. It can pay for medical costs not covered by Medicaid. The parents
generally serve as trustee. After they die, a successor trustee takes