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What is a Special Needs Trust? Learn About Its Benefits

What is a Special Needs Trust? Learn About Its Benefits

Caring for a loved one with special needs often raises an important question—how will they be cared for when we are no longer here? We hear this question often, and the good news is that there are practical ways to prepare.

At Commonwealth Life & Legacy Counsel, we help families create plans that protect their loved ones while keeping vital government benefits intact. One of the most effective tools is a Special Needs Trust (SNT).

What is a Special Needs Trust?

A Special Needs Trust allows funds to be set aside for a person with a disability without interfering with benefits like Medicaid or Supplemental Security Income (SSI). These programs limit assets to just $2,000, so even a small gift or inheritance could cause issues. An SNT helps prevent that.

With this trust, a trustee — often a family member or friend — manages funds to provide extra support without replacing basic benefits. The money can help pay for therapy, education, transportation, and other services that improve quality of life.

Types of Special Needs Trusts

Virginia recognizes three types of SNTs:

  • First-Party SNT: Funded with the beneficiary’s own assets, such as an inheritance or settlement, and may require Medicaid repayment when the trust ends.
  • Third-Party SNT: Funded by parents, relatives, or others and does not require Medicaid payback. Remaining funds may go to other family members.
  • Pooled SNT: Managed by a nonprofit that pools funds for investment but keeps individual accounts separate.

These trusts follow Virginia law, including § 64.2-779.10 of the Code of Virginia.

Why Consider a Special Needs Trust?

An SNT offers real benefits. It preserves eligibility for programs like Medicaid and SSI, protects assets from creditors, and gives families reassurance that their loved one will continue to receive care and support. The funds can be used for things not covered by public benefits, such as therapies, transportation, or educational opportunities, helping to improve the beneficiary’s day-to-day life while maintaining long-term security.

We’re Ready When You Are

If you’re thinking about whether a Special Needs Trust is right for your loved one, we are here to help. Call us in Central Virginia at 434-589-2958 or in Powhatan at 804-598-1348, or visit us online to learn more.