If you have a child or grandchild with a disability, caring for and providing for them could actually hurt their eligibility for benefits programs in the long run. Special needs trusts can help them stay eligible and allow you to support them, even if you become incapacitated or pass away.
Social Security Disability and other programs like Medicaid have income and/or asset limits that block recipients from being able to have “too much” money. If you do not use a special needs trust and other tools to provide for them, it could hurt their eligibility. Dying without a will and a special needs trust can also do the same when your child inherits “too much” money.
For help, call for a free case evaluation with Flake & Flake’s special needs planning attorneys at (702) 829-5731.
How Special Needs Trusts Work in Nevada
When someone owns property or money, they have control over it and can benefit from it. When you pay to support someone with a disability – such as a child or grandchild – that can qualify as “their” money or assets.
Because Social Security Disability (SSD) and other programs have income and asset limits, you may need to find a workaround – which is where special needs trusts come in.
Separating Control and Benefit
First, using a trust separates control and benefit of assets. The “grantor” (i.e., you) puts money and property into a trust so that the “trustee” can use them to benefit the “beneficiary.”
In most cases, you will act as trustee while you are alive and use the assets to benefit a disabled child or grandchild. You can also set up a special needs trust to pass control to someone else when you die, or you can set it up upon death so the money/assets go there instead of directly to your loved one.
Disability Income and Asset Limits
The legal definition of “disability” means that the person has a health or mental condition that makes them unable to work and support themselves financially. This qualifies them for benefits like Medicare, Medicaid, and SSD – as long as they stay under those income and asset limits.
If they make too much money, it shows the government they do need these benefits.
Problem with Inheritance
When you die, if your assets pass directly to your disabled child or grandchild, it will likely give them too much money and violate their limits. This would mean they no longer qualify for programs they need.
Using a Special Needs Trust
When you use a special needs trust, you can put money into the trust, or the trust can inherit the money instead of your disabled child/grandchild.
The control of the assets is given to the trustee, but the money can still be used to benefit your disabled loved one by paying for things like medical care. The Social Security Administration and other programs do not count the money and assets in a special needs trust against the beneficiary’s asset/income limits, as long as they are managed and spent properly.
Requirements for a Special Needs Trust
Because special needs trusts let you do special things with money that usually are not allowed with a regular trust or bank account, the special needs trust needs to meet specific criteria:
- The trust has to be irrevocable, meaning you cannot take it back.
- The trust must be created to pay for a disabled person’s special needs.
- The beneficiary must be disabled, i.e., they cannot work to support themselves because of a physical or mental condition.
- The beneficiary must be under 65 years old.
- The trust must be made by the disabled person’s parent, grandparent, or guardian, or the court.
- The trust must revert to the state when the beneficiary dies (at least in the amounts that would be used for the person’s healthcare).
Missing Requirements
If requirements are missing, then the trust cannot qualify as a “special needs trust.” This means that amounts in the trust could be treated as assets or income for the disabled beneficiary, potentially violating requirements for their benefits.
Making sure you meet all of the requirements is a good reason to work with a special needs planning lawyer.
Expenditures that Violate the Rules
If the trust spends money on things other than healthcare and support for the disabled beneficiary, then that money can count as income or assets for the beneficiary and potentially disqualify them for benefits.
Sometimes expenditures serve the beneficiary and others, such as money used to purchase a house for the beneficiary plus their children or partner. If this happens, the costs can be split so that a portion counts as income to the other people but not for the beneficiary.
FAQs for Special Needs Trusts in Las Vegas
Do You Set Up a Special Needs Trust While You Are Alive or After You Pass?
You can use a special needs trust to care for a disabled loved one while you are alive. This can be a good way to set up their finances so you do not violate their asset or income limits by accident.
However, a special needs trust can also be set up through your will. This can put assets into the trust instead of giving them directly to a disabled loved one so that it does not violate their asset limits.
What’s the Difference Between an ABLE Account and a Special Needs Trust?
An ABLE account (Achieving a Better Life Experience account)is a special account you can set up to help pay for a disabled person’s qualifying expenses, without the money in the account counting toward their asset limits. These similarly help a disabled person get access to more money without violating limits, but they have some differences:
- ABLE accounts have contribution limits.
- ABLE accounts only have money in them, while special needs trusts can have property and other assets held in trust.
- You can only start an ABLE account for someone who was disabled before turning 46 (or before turning 26, if the account was started before 1/1/2026), while you can set up a special needs trust for anyone disabled and under 65.
- Only assets under $100,000 in an ABLE account avoid violating asset limits.
Can’t You Just Manage Their Money Yourself?
You may be able to manage a disabled loved one’s money yourself, but doing so could count your assets as their assets. This is also not possible once you pass away.
If you pass without setting up a special needs trust, and your money goes straight to your disabled heir, then that money could violate their asset limits and stop their benefits.
Call Our Special Needs Planning Lawyers in Las Vegas Today
For help with your case, call Flake & Flake’s special needs planning lawyers at (702) 829-5731 today.
