Special Needs Trust Definitions

For most of my clients, discussing whether a Special Needs Trust is the appropriate strategy for them requires a basic understanding of some terms.  The following are the Special Needs Trust Definitions of the most common terms used.

Beneficiary

The beneficiary is the person whose benefits the Special Needs Trust is established to protect.  The beneficiary of a Special Needs Trust will generally be a low-income individual who is either disabled, blind, or elderly and have limited income and few assets.

Trustee

The trustee is the person (or entity) responsible for managing the trust assets and administering the trust provisions.  In the event that there are two or more trustees acting at the same time, each is referred to as a co-trustee.  The beneficiary can never serve as the trustee of their own Special Needs Trust.  The trustee may be a professional trustee (such as a corporate bank trustee or a lawyer).

Disability

For most beneficiaries of a Special Needs Trust, the term “disability” or “disabled” refers to the same benefit eligibility requirements used to determine eligibility for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI).  It includes the inability to perform any substantial gainful employment.

Grantor

The grantor of the Special Needs Trust is the person whose assets funded the trust.  The grantor is often referred to as the “settlor” or “trustor.”  There can be more than one grantor for any given trust.  The term grantor becomes confusing for a Special Needs Trust because often the actual grantor (the one whose assets funded the trust) is often not the same person that signs the Special Needs Trust.

Supplemental Security Income

Supplemental Security Income, better known by the initials “SSI” is a federal government benefit program available to low-income individuals who are disabled, blind, or elderly and have limited income and few assets.  SSI eligibility rules form the basis for most other government program rules.

Social Security Disability Insurance

Social Security Disability Insurance, better known by the initials “SSDI” or “SSD” is a federal government benefit program available to individuals with a disability who either have sufficient work history proper to becoming disabled or are entitled to receive benefits by virtue of being a dependent or survivor of a disabled, retired, or deceased insured worker.  There is no “means” test which means that eligibility is not based on limited income or assets.  If you qualify for SSDI you may also be eligible to qualify for SSI and/or Medicaid benefits.

Irrevocable Trust

An irrevocable trust is simply a trust that once signed can not be revoked or amended.  Generally, Special Needs Trusts are irrevocable trusts.

Revocable Trust

A revocable trust is a trust that by its terms allows it to be revoked or changed.

Medicare

Medicare is a health care program operated by the federal government.  Medicare benefits are afforded to all those age 65 and over (provided that the person would be entitled to receive Social Security benefits if they chose to retire, whether or not they actually retired) and those under 65 who have been receiving SSDI for at least two years.

Medicaid

Medicaid is another health care program.  It differs from Medicare in three distinct ways.  First, it is run by state governments.  Second, it is available to those who meet financial eligibility requirements rather than being based on the age of the recipient.  Third, it covers all necessary medical care.

The Probate Pro is available to provide a more detailed explanation of the Special Needs Trust definitions.