Special needs trust is a legal trust created to provide funds to recipients of Supplemental Security Income (SSI) or Medicare without counting towards the income caps for either welfare program. Income from the trust avoids counting towards income caps as long as the funds are managed completely by the trustee and not spent on specific categories of expenses that will trigger SSI or Medicare caps. The funds can be used for a variety of expenses like for medicine, transportation, or other needs as long as they do not go towards housing or food. A lot of people use special needs trusts to help disabled individuals because it avoids spending limits, allows them to control where the funds are spent, and are untouchable by the creditors of the beneficiary.
[Last updated in August of 2021 by the Wex Definitions Team]