This document outlines key concepts regarding special needs trusts. Special needs trusts are intended to supplement, not replace, public benefits for a disabled beneficiary. Funds in the trust do not affect eligibility for means-tested programs like Medicaid and SSI. There are two types of special needs trusts: third-party trusts established by others using their own assets, and self-settled trusts established using the disabled person's assets. A properly drafted and administered special needs trust can help maintain public benefits for the disabled beneficiary.

1. MOERTL, WILKINS & CAMPBELL, S.C.
ATTORNEYS AT LAW
SUITE 1017
ONE PLAZA EAST
TELEPHONE 330 EAST KILBOURN AVENUE FAX
414-276-4366 MILWAUKEE, WISCONSIN 53202 414-276-1192
SPECIAL NEEDS TRUSTS
This outline is intended to provide an understanding of a few “basic” concepts
relating to special needs trusts.
1. The purpose of a special needs trust is to supplement a disabled
beneficiary’s lifestyle rather than to supplant public benefits. If funds are left
outright to a disabled beneficiary that person will lose his or her public
benefits.
2. Funds in the trust are “unavailable”. The funds do not affect means-tested
programs.
3. A few examples of means-tested programs are:
• SSI
• Medicaid
• Food stamps
• State Waiver Programs
4. Benefits which are not means-tested include SSD and Medicare.
5. There are two types of special needs trusts:
• Third-Party Trust
• Self-Settled Trust
6. A third-party trust is established by a third-party with assets of the third-party
for the benefit of the disabled individual.
7. Often, a third-party trust is established by a parent of a disabled child.
8. With a third-party trust –
• There is no requirement that the agency providing benefits be paid
back funds from the trust on the death of the beneficiary.
9. A self-settled trust is established with the assets of the disabled person.

2. 10.A self-settled trust must be established by the parent, grandparent, or
guardian of the person or by a court.
11. The sole beneficiary of a self-settled trust must be the disabled person.
12.Self-settled trusts are typically used when a disabled person inherits funds or
receives money as a result of a tort action.
13.On the death of the beneficiary assets remaining in trust must be used to pay
back the state agency which had provided benefits.
14.It is critical that any special needs trust be both properly drafted and
administered.
15.Assets must not be available to the disabled person. The trust must be a
discretionary trust.
16.A discretionary trust is a trust “in which the trustee has full discretion as to the
time, purpose and amount of all distributions . . . The beneficiary has no
control over the trust”.
17.A properly drafted trust can provide numerous circumstances under which
the trustee can make distributions. However, the trustee must understand
rules governing distributions. Improper distributions can cause the loss of
public benefits to the beneficiary.
TERRY L. CAMPBELL