Special Needs Trusts In Massachusetts: How To Protect Benefits And Provide Care
Families caring for a loved one with disabilities face unique estate planning challenges. Providing financial support is essential, but direct gifts or inheritances can unintentionally disqualify a beneficiary from critical public benefits. In Massachusetts, special needs trusts are a powerful planning tool that allows families to provide care and financial security without jeopardizing eligibility for programs such as SSI and MassHealth.
Why Traditional Inheritances Can Cause Serious Problems
Many public benefit programs impose strict income and asset limits. If a person with disabilities receives an inheritance outright, even a modest amount can result in the loss of benefits. Once benefits are lost, requalifying can be difficult and time-consuming.
Well-meaning family members often create these problems unintentionally by naming a child with disabilities directly in a will, life insurance policy, or retirement account.
What A Special Needs Trust Does
A properly drafted special needs trust holds assets for the benefit of a person with disabilities without giving them direct ownership. The trust is managed by a trustee who uses trust funds to supplement, not replace, public benefits.
Funds may be used for:
- medical and dental care not covered by insurance
- therapy and rehabilitation
- education and vocational training
- transportation and specialized equipment
- recreation and quality-of-life expenses
Because the beneficiary does not control the assets, eligibility for benefits is preserved.
Types Of Special Needs Trusts In Massachusetts
Massachusetts recognizes several forms of special needs trusts, including:
- Third-party special needs trusts, funded with assets belonging to parents or relatives
- First-party special needs trusts, funded with the beneficiary’s own assets, such as personal injury settlements
- Pooled trusts, managed by nonprofit organizations for multiple beneficiaries
Each type has different legal requirements, tax implications, and restrictions. Choosing the wrong structure can result in benefit loss or repayment obligations.
Choosing Trustees And Planning For Long-Term Care
Selecting the right trustee is critical. Trustees must understand benefit rules, reporting requirements, and proper distributions. Many families choose professional or co-trustees to ensure long-term compliance.
Special needs planning also involves coordinating guardianship, health care proxies, and successor planning so care continues seamlessly if parents are no longer able to assist.
Call Troy Sullivan For Special Needs Planning
Protecting a loved one with disabilities requires careful legal planning. At The Sullivan Firm P.C., we help Gloucester and North Shore families create special needs trusts that preserve benefits while providing meaningful support and long-term care. Call 978-325-2721 to schedule a consultation and discuss a special needs trust tailored to your family’s situation.
