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 Virginia, 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 assets held in the trust without jeopardizing their eligibility for government assistance programs like Medicaid and Supplemental Security Income (SSI). Virginia law conforms to federal regulations regarding SNTs, which stipulate that the trust must be established for the benefit of an individual under 65 years of age who is disabled as defined by the Social Security Administration. The trust is typically funded by parents or other family members and is managed by a trustee who has discretion over distributions. Distributions from the trust are not meant to cover basic needs that are provided by public benefits (such as food, clothing, or shelter), but rather to pay for supplemental needs that enhance the beneficiary's quality of life. It's important to structure the trust correctly to ensure that it does not affect the beneficiary's eligibility for government benefits. An attorney with experience in special needs planning can provide guidance on setting up and administering a Special Needs Trust in accordance with Virginia and federal law.