Three Ways a Special Needs Trust May Benefit Your Family

 Posted on October 06, 2025 in Wills and Trusts

Caring for a loved one with special needs often means looking far into the future. Parents and family members want to make sure their child or relative is supported, even after they are no longer able to provide care themselves. Programs like Supplemental Security Income (SSI) and Medicaid are essential, but they have strict rules about income and assets. Even a small inheritance or gift could put those benefits at risk.

A special needs trust (SNT) is one of the best ways to provide financial security without losing access to important government assistance. A trust allows you to set aside money or property for a person with disabilities while making sure the funds are managed carefully. With help from experienced Lombard, IL estate planning lawyers, families can create a plan that offers protection and peace of mind.

Three Reasons Why Special Needs Trusts Are Important

A special needs trust does more than set aside money for the future. It provides legal and financial protections that help ensure a person with disabilities can live with security and dignity. Consider the three most important reasons to create one for your family member.

Preserving Eligibility for Government Benefits

One of the main advantages of a special needs trust is that it protects eligibility for programs like SSI and Medicaid. These programs are "needs-based," which means the person applying cannot have more than a very small amount in savings or property. For example, SSI rules generally limit a person to $2,000 in countable assets.

If a person with disabilities receives money directly, even from a well-meaning parent or grandparent, they could lose benefits until the money is gone. A special needs trust prevents this problem. The assets are not counted as the beneficiary’s property because they are managed by a trustee.

This is allowed under federal law, specifically 42 U.S.C. § 1396p(d)(4)(A). Additionally, Illinois law provides rules for guardianships and trust management under 755 ILCS 5/11a. Together, these laws make sure that families can provide extra financial support while their loved one continues to qualify for government benefits.

Ensuring a Lifetime of Financial Support

A special needs trust also helps guarantee support for the person’s entire life. While SSI and Medicaid may cover food, housing, and basic medical care, they do not pay for many other important needs.

Through a trust, families can make sure their loved one has money for things like medical equipment, specialized therapies, education, transportation, and even recreation. These extras can make a major difference in quality of life.

Protecting Inheritance and Family Assets

Money left directly to a person with special needs can be vulnerable to poor management or even financial exploitation. A special needs trust makes sure that does not happen. The family can set rules for how the money is used and choose someone to manage it responsibly. The goal is to ensure that the money is used as intended.

What Can a Special Needs Trust Pay For in Illinois?

Trust funds can be used for many expenses that improve the beneficiary’s comfort, health, and independence. Common examples include:

• Medical and dental care not covered by insurance

• Physical, occupational, or speech therapy

• Specialized equipment, such as wheelchairs or hearing aids

• Accessible vehicles or transportation services

• Educational programs, tutoring, or job training

• Home modifications, like ramps or lifts

• Computers, phones, or other technology

• Recreational activities, hobbies, or travel

• Personal care attendants or in-home support

Paying directly for these needs supplements government benefits without putting them at risk.

First-Party vs. Third-Party Special Needs Trusts

There are two main types of special needs trusts. A first-party trust is funded with the beneficiary’s own money, such as a settlement from a personal injury case. These trusts must include a Medicaid payback clause, which is part of the state’s estate recovery process. This means that when the beneficiary passes away, any funds left in the trust may be used to reimburse the state for their Medicaid care costs.

A third-party trust is funded by someone else. Typically, parents, grandparents, or other relatives contribute. These trusts are common in estate planning and do not require Medicaid payback. An estate planning lawyer can help determine which option best suits your family’s situation.

How Long Does a Special Needs Trust Last?

An SNT can be written to last for the beneficiary’s lifetime. By naming successor trustees and giving clear instructions, families can create a structure that will continue to provide stability for decades. The trust can be written to adjust as laws change or as the beneficiary’s needs grow. Families also often connect the trust to a will or life insurance policy. That way, more funds are added after parents or caregivers pass away.

Who Should Be the Trustee of a Special Needs Trust?

Choosing a trustee is one of the most important parts of creating a special needs trust. The trustee manages the money, makes distributions, and ensures the trust follows all legal requirements. Families sometimes select a close relative or friend who knows the beneficiary’s daily needs. Others prefer a professional trustee, such as a bank or trust company, to provide financial expertise and oversight. In some cases, families use both by appointing co-trustees.

For example, you might choose a sibling as trustee because they know your loved one’s needs, while also naming a professional to manage the financial details. This way, you combine personal care with professional oversight. You could also name a successor trustee to step in if the original trustee is no longer able to serve.

Contact a Lombard, IL Estate Planning Attorney Today

At A. Traub & Associates, we have a team of DuPage County, IL estate planning lawyers who have built a strong reputation for helping families throughout Northern Illinois. For more than 20 years, founder Angel Traub has been a respected leader in the legal community. With a team dedicated to compassionate, knowledgeable service in estate planning and family law, our firm is proud of its history and the trust families place in us to protect what matters most.

Call 630-426-0196 today to schedule a private consultation and learn how we can help..