I hope the parents here will find this article in the NYT helpful:
AttorneyMother, that is a good article.
I’ve been helping (very, very generally only) a friend plan for a special-needs adult son. This thread has been helpful. Thanks to everyone here.
Also, this ABA panel discussion about Special Needs Trusts contains a very useful checklist (starting on page 97) for advanced planning considerations.
http://www.americanbar.org/content/dam/aba/publishing/rpte_ereport/te_lewis.authcheckdam.pdf
Thank you for this @AttorneyMother!!
AttorneyMother,
You can’t pay for food, rent, property taxes, water, electricity with the money in a special needs trust?
I am looking at the bottom of page 26 or page 28 depending on the page number used.
@dstark
As I understand it (again, only very, very generally), the SNT cannot provide for basic needs for which there are means testing in place. From page 27 of the PDF file:
But (see page 28),
So, I read this to mean that SNT cannot pay for the items listed above.
I’m also adding this document put out by the American College of Trust and Estate Counsel regarding SNT drafting. It’s sponsored by OH counsel, so pay attention only to the Federal considerations, which should be applicable to all SNT:
http://www.actec.org/Documents/misc/DavisSpecialNeeds.pdf
Edited: here is a bare-bones form of a SNT. In case anyone wants to see what provisions are typical:
https://www.lexisnexis.com/documents/pdf/20090331013236_large.pdf
Yes…so why am I setting up a special needs trust?
SSI is inadequate to pay for my daughter’s needs. SSI can not pay for my daughter’s food, gas, water, electricity, property tax if the trust inherits the house…
Once those needs are paid for by the trust, my daughter loses her ssi.
Medicaid costs will be recovered by the state.
Then there are fees to manage the trust…
Should I be leaving my assets to my other kids? Then my daughter can live rent free in the house.
AttorneyMother, you posts and link opened my eyes. @@@@. We have more work to do…
@dstark
I’m sorry, but I don’t know the answer. There are many other items that can be supplemented without risking SSI, as I understand it. I don’t know what your state’s laws require. But there are supplemental needs that can be provided by a Supplemental Care" SNT (Page 6 of PDF). You’ll note that there are different types of SNT. The key is that the special-needs person is the beneficiary under the trust and the trustee is the fiduciary. This is an important relationship within the law.
The arrangement you propose does not strictly protect the special-needs person because the donee(s) of your assets can dispose of them as they wish. I’m not saying this will happen, but it could and the special-needs child would have no recourse.
AttorneyMother,
Thanks.
Things are a little more complicated than I thought. 
My friend, who has a wonderful attitude, said: some parents plan longer and with an eye towards more detail for their children’s weddings and don’t balk at the enormous cost. If she is able, she won’t balk at spending careful time planning and paying the cost of planning for her only son. He is her only child and her problem is in the choice of a reliable trustee.
Will SSI and medicaid cover your friend’s son’s total needs?
My daughter works 4 hours a week and her benefits were cut $50 a month.
I am paying for another daughter’s wedding. Not thrilled about the cost.
I did hire a lawyer. I am going to be in contact with this lawyer.
I must be missing something. I have talked to a few people and it is hard to live on $10,000 a year.
Around here… Maybe you can live on $25,000-$30,000 a year. Yet… These trusts are being set up so I am missing something.
@dstark
Congratulations! 
I don’t know what my friend’s son’s coverage is. He is not working and is very disabled. My involvement is in the “estate planning” talk in the preliminary stage. I’ve been gathering lists and resources for her and helping her put a list of issues together to make sure she has asked all the right questions. She and her husband are in their 60s.
She’ll most likely go with an attorney she finds on the directory of specialists, starting here, rather than a straightforward estate planning lawyer:
AttorneyMother,
Thanks.
I have gone through 2 attorneys. I have the name of another attorney on my iphone. He is supposed to be an expert on special needs trusts. Maybe the thrid time is the charm.
Thanks for the link too. I am going to go through it.
At least regarding the cost of the wedding, there is going to be a wedding. With the lawyers I have used, I don’t think I got what I wanted.
AttorneyMother,
If income from the special needs trust is used for housing, or food, ssi can be reduced up to 1/3.
http://www.bazelon.org/LinkClick.aspx?fileticket=agf4ufgn66w%3D&tabid=129
I am going to do more investigating.
There is already a reduction in ssi benefits if the beneficiary lives in his or her parents house so I don’t know if there are additional reductions.
http://specialneedsanswers.com/qualified-disability-trusts-can-offer-tax-savings-12522
The taxation of trusts is much higher than the taxation on individuals.
If income taxes are higher from a trust than benefits…hmmmm
Excerpted from https://www.americanbar.org/newsletter/publications/gp_solo_magazine_home/gp_solo_magazine_index/grassi.html
Five estate planning options are available to the parents:
(1) distributing assets outright to the child (not recommended because the assets may disqualify the child from receiving means-tested government benefits);
(2) disinheriting the child (generally not recommended because the child will have no “safety net” if government benefits are subsequently reduced or eliminated);
(3) leaving property to another family member for the child’s benefit (not recommended because the arrangement is not legally enforceable and the siblings’ creditors may be able to seize the assets);
(4) establishing a third-party discretionary support trust for the child (not recommended because the trust will, in many states, disqualify the child from receiving means-tested government benefits); and
(5) establishing a third-party created and funded SNT (highly recommended because the trust will not disqualify the child from receiving means-tested government benefits).
Of these five options, practitioners generally prefer that parents establish an inter-vivos stand-alone, third-party created and funded SNT.
Under existing law, assets contained in a properly drafted and administered third-party created and funded SNT are not considered to be “available” to the special needs child for determining the child’s financial eligibility for means-tested government benefits. Also, there is no requirement that Medicaid be repaid from the third-party created and funded SNT when the child dies or if the trust terminates during the child’s lifetime.
Choosing a trustee:
Because the trustee of the SNT is given complete discretion in making distributions to or for the child’s benefit, the choice of who should serve as the trustee of the SNT is important. The selection of the trustee involves many considerations, including the trustee’s ability to understand and respond to the child’s needs; the trustee’s knowledge of government benefit programs and the effect that trust distributions will have on the child’s government benefits; the trustee’s health, integrity, reliability, and financial acumen; the trustee’s potential for a conflict of interest if the trustee is a current or remainder beneficiary of the trust; and the potential for adverse income and transfer tax consequences if a family member serves as a trustee and is also a current or remainder beneficiary of the trust.
Coordination with other relatives’ estate plans:
The principal purpose of a third-party created and funded SNT is to provide an inheritance for the special needs child without risking the loss of important means-tested government benefits. Consequently, it is important that grandparents and other relatives do not leave an inheritance outright to a special needs loved one.
A corollary to the need to coordinate a special needs child’s inheritance with other relatives is the need to review all possible ways a special needs child could receive property, an inheritance, or a gift. For example, the following common assets and applicable beneficiary designations are examples of assets that should be reviewed to make sure they will not be paid directly to the special needs child: IRA, 401(k), or other retirement benefits; life insurance; any property not subject to the parents’ will or trust; and joint accounts.
Managing assets already owned by a special needs child:
If a special needs child who is disabled has received an inheritance, gift, bequest, lawsuit award or settlement, child support, alimony, or divorce property settlement, the child’s receipt of these assets can result in the disqualification of means-tested government benefits.
To preserve these benefits, the child’s disqualifying assets should be converted into “exempt” or “non-countable” assets or transferred to a first-party self-settled SNT that is government approved.
(1) The first type of safe harbor first-party self-settled SNT is an inter-vivos irrevocable trust or a "Medicaid payback trust.” This type of first-party self-settled SNT is best suited for a significant amount of resources that can sustain a professional trustee’s minimum fee schedule. By statute, it must contain a Medicaid payback provision on the death of the special needs child.
(2) The second type of safe harbor first-party self-settled SNT is an inter-vivos “pooled account trust." A “pooled account” SNT is administered by a nonprofit charitable association, which also acts as the trustee. The child’s disqualifying assets are transferred into the master trust, and a separate trust account is established by the nonprofit charitable association for the child’s sole benefit. For purposes of investment and management of funds, however, the master trust pools all the separate trust accounts. A pooled account trust is best suited for a situation in which the amount of non-exempt assets owned by the special needs child is not large enough to justify the cost of establishing and administering the type of SNT in (1) above or when the parents or child want to ultimately benefit the mission of the nonprofit association on the child’s death.
@dstark, I’m sure you are already well into this process, but, IIWY, I would go back through pages 3-17 of this link to make sure all your considerations are covered, as there appears to be different features/timing of SNT that might be most suitable to your special-needs individual’s circumstances:
http://www.americanbar.org/content/dam/aba/publishing/rpte_ereport/te_lewis.authcheckdam.pdf