What is the term for a trust formed for the benefit of a disabled person which will allow the disabled person to hold assets while continuing to qualify for income- or asset-based governmental benefits?

• A. Pecuniary share
• B. Special needs trust (SNT)
• C. Lineal descendant
• D. A/B will

Answer: (B)

Special needs trust. These trusts are designed to hold assets for a disabled person while preserving eligibility for means-tested government benefits such as SSI and Medicaid. The trust is set up for the benefit of the disabled individual, so the beneficiary does not own the assets directly. Instead, a trustee manages and uses the trust funds to pay for goods and services that supplement, rather than replace, government benefits. This structure lets the beneficiary continue to qualify for benefits because the trust’s assets and income are treated separately from the beneficiary’s own resources. Typically funded with third-party assets (though a first-party SNT is possible with payback rules), it’s the “for the benefit of” design and the way distributions are used that keeps benefits intact. The other terms don’t describe this arrangement: a pecuniary share is a fixed inheritance amount, a lineal descendant is a family relation, and an A/B will refers to a different estate-planning instrument.