If a loved one needs Social Security benefits – usually disability through SSI or SSDI – they may be under financial restrictions. These could stop them from being able to have assets or income over a certain limit, or else risk their benefits. If you use a special needs trust for them, can you avoid an effect on their Social Security benefits?
One of the most important features of a special needs trust is that it allows the beneficiary to get access to additional funds without losing Social Security benefits. When means tests and financial restrictions are in place on the disabled benefits recipient, a properly set up special needs trust may be the best – or only – way to get them additional money, whether you are controlling that money during your lifetime or trying to pass assets to them in your will.
For help with your case, call Flake & Flake’s Las Vegas, NV special needs trust lawyers for a free case evaluation at (702) 829-5731.
Will a Special Needs Trust Hurt the Beneficiary’s Social Security?
Generally, no. In fact, the main purpose of a special needs trust is that it does not affect the beneficiary’s Social Security, but only if it is set up and used properly.
Social Security Means Tests and Financial Restrictions
Giving money to someone on Social Security disability (SSD) could hurt their SSD benefits, but it is important to understand how.
Income Limits
For someone to qualify for SSD benefits, they need to be “disabled.” This definition means that they cannot work to gain enough income to support themselves under the “substantial gainful activity” (SGA) limit. In 2026, this means that they cannot make more than $1,690 per week ($2,830 if they are blind).
If you give them a stipend of money, then it may put their income over this limit and stop their SSD. Only active income (i.e., income they worked for) should be counted under SSD, but it is always a risk.
SSI vs. SSDI
There are actually two types of SSD benefits:
- SSI – Supplemental Security Income – is need-based SSD for people who do not have a work history. It comes with additional asset restrictions.
- SSDI – Social Security Disability Insurance – is a disability insurance you pay into through years of work and paying taxes so it can protect you if you become disabled.
If your loved one was disabled from childhood or did not have a long work history, they are likely on SSI, which has even more restrictions.
Asset Restrictions
To qualify as “need-based” for SSI, you cannot have assets over $2,000 for an individual ($3,000 for a couple). If a parent or other loved one contributes to their assets or uses their own assets to care for their loved one, they may be deemed the recipient’s assets and violate their limit.
How Special Needs Trusts Avoid SSI Restrictions
When a special needs trust is properly set up, the money in the special needs trust can be used to support a loved one without giving them money directly. If the money is not theirs, then it is not counted toward their income limits for SSI.
Control is Separate
In a trust, the control of the assets is separate from the benefit of the money or assets. Thus, a trustee manages the money, not the SSI recipient. This means that they cannot use it as they want, so the SSA (Social Security Administration) doesn’t treat it as “their” money.
Irrevocability
Special needs trusts are irrevocable. This means that the beneficiary cannot just take back the money and use it however they want; it can only be used for special purposes like housing and medical care.
This is a requirement the SSA looks for in order to keep a special needs trust from counting against the benefits recipient’s assets.
Can’t You Just Manage Someone’s Assets for Them?
Generally, no. If you provide direct financial support to someone on SSI, your assets and support may be deemed part of their assets and violate their resource limit. This could reduce their SSI benefit or even hurt their eligibility. Essentially, the SSA views that as their money, even if it comes from someone else.
Our Nevada special needs trust attorneys can use special needs trusts gets around this restriction and allow you to support a disabled person through the trust, as long as the trust’s rules are all followed properly.
Rules for Setting Up a Special Needs Trust
A special needs trust has to be set up properly to avoid hurting the beneficiary’s SSI benefits and eligibility:
- The trust must be irrevocable, meaning you cannot take the money back.
- Parts of the trust must revert to the State of Nevada when the beneficiary dies.
- The trustee must be someone other than the beneficiary.
- The trust must be established by a parent, grandparent, guardian, or court.
- The beneficiary must be under age 65.
- The beneficiary must be disabled.
You must also set up the trust with the purpose of providing support to the disabled beneficiary.
Rules for Spending Through a Special Needs Trust
The trust must be properly administered for the protections to continue. This means using the trust’s money for the support of the disabled beneficiary.
If the money in the trust is spent in another way, it may count as income or assets for the beneficiary. This could reduce their SSI benefits or even make them ineligible – or at least draw scrutiny from the SSA.
Setting Up a Special Needs Trust in a Will
There are also limits on giving a disabled SSI recipient money or property in a will. Doing so may make the money/assets count against their asset limit.
Instead of bequeathing money/assets to them directly, you can use your will to fund a special needs trust that will be administered for their benefit. You can also set it up while you are alive, manage it until you pass, then set up another trustee to administer the trust when you pass – such as a disabled child’s sibling, aunt, uncle, or cousin.
Are There Other Alternatives?
An ABLE account similarly allows for money to be put aside for a disabled loved one’s care or needs without busting their SSI asset limits.
This has its own pros and cons, and it might not work as well with an inheritance. Special needs trusts are therefore one of the most popular ways to handle money passed through a will to a disabled heir.
Call Our Special Needs Trust Lawyers in Nevada Today
To discuss your options, call our Henderson, NV special needs trust attorneys at Flake & Flake today at (702) 829-5731.
