All of the trusts that Community Trust manages are “discretionary.” This means that the trust instruments identify goals and describe the kinds of outcomes that the settlor wants for the beneficiary, but the trustee decides which specific distributions will meet those objectives.
The alternative to a discretionary trust is a non-discretionary support trust. If distributions are mandatory, the trustee might not be able to prevent the loss of public benefits for the beneficiary. This limit is important for such as benefits from Medicaid, Supplemental Security Income (“SSI”) or other public programs.
As the term, “special needs trust,” implies, much of the purpose in creating a disability trust is to use the funds only for needs that go over and above what public benefits can provide. Trustee discretion, as well as the expertise of the trustee, are essential to meeting this purpose.
Sole Benefit
Another important characteristic of all disability trusts is that they can have only one beneficiary, and only that person can receive benefits of the trust during his or her lifetime. If there are other individuals—even other disabled individuals—to whom the settlor would like any remaining assets to go when the beneficiary dies, those individuals can receive only whatever may be left after paying back the Medicaid program for the benefits provided to the original beneficiary during lifetime.
