A special needs trust—also known as a supplemental needs trust—is an irrevocable trust designed to provide supplemental income for a designated beneficiary who is physically disabled, mentally disabled, has chronic illness, or has other special needs and is receiving or may be eligible to receive government benefits—such as Social Security, Supplemental Security Income (SSI), Medicare, or Medicaid.

A special needs trust is often created by parents of a disabled child, with the trust prohibiting distributions from being used for the child’s food, clothing, or shelter to ensure the child (or adult) remains eligible for related government benefits. A special needs trust must be created before the beneficiary reaches the age of 65.

In North Carolina, a special needs trust (SNT), also known as a supplemental needs trust, is a legal arrangement that allows a person with a disability to benefit from additional resources without jeopardizing their eligibility for government assistance programs like Social Security, Supplemental Security Income (SSI), Medicare, or Medicaid. These trusts are designed to provide for the extra and supplemental needs of the beneficiary, beyond what government benefits cover, without disqualifying them from receiving such benefits. The trust assets can be used for a variety of life-enhancing expenditures without compromising the beneficiary's access to essential government services. North Carolina adheres to federal guidelines regarding SNTs, which stipulate that the trust must be irrevocable and that it should be established before the beneficiary turns 65 years old. The trust is typically set up by a parent, grandparent, legal guardian, or the court, and it must be managed by a trustee who disburses funds in a way that does not interfere with the beneficiary's government benefits. It is important for individuals considering setting up an SNT in North Carolina to consult with an attorney who specializes in special needs planning to ensure that the trust is properly structured and administered in accordance with both state and federal laws.