A special needs trust (SNT) is a legal tool that lets you provide for a family member with a disability without disqualifying them from government benefits. In Washington State, people with disabilities may rely on Medicaid for health care and Supplemental Security Income (SSI) for monthly income. Both programs have strict income and asset limits — if a disabled person inherits money directly, they could lose these benefits. A special needs trust solves this problem by holding assets in a trust that does not count toward those limits. If you have a disabled child, sibling, or parent in Bellevue, Seattle, Kirkland, Redmond, or Issaquah, an SNT may be essential. Call (425) 368-9855 to speak with a Bellevue estate planning attorney today.
What Is a Special Needs Trust in Washington?
A special needs trust is a type of irrevocable trust designed to hold assets for a person with a disability. The trust is managed by a trustee who uses the funds to pay for things that government benefits do not cover — such as education, transportation, entertainment, medical expenses not covered by Medicaid, and personal care items. Because the disabled person does not own the assets directly, the trust does not disqualify them from needs-based government programs. In Washington, SNTs are governed by both federal law (42 USC 1396p) and Washington State trust law.
Types of Special Needs Trusts in Washington
There are three main types of special needs trusts used in Washington State. Each serves a different purpose.
First-Party Special Needs Trust
A first-party SNT is funded with the disabled person's own assets — for example, money from a personal injury settlement or an inheritance they received directly. Under federal law, the trust must include a "payback" provision that reimburses Medicaid for the cost of care after the disabled person dies. This type of trust is only available to people under age 65.
Third-Party Special Needs Trust
A third-party SNT is funded with assets from someone other than the disabled person — usually a parent or grandparent. This is the most common type used in estate planning. When the disabled person dies, there is no Medicaid payback requirement. The remaining assets can go to other family members. A Bellevue estate planning attorney can set this up as part of your will or living trust.
Pooled Special Needs Trust
A pooled SNT is managed by a non-profit organization. Multiple beneficiaries pool their assets for investment purposes, but each person has a separate account. This option is useful when the amount of assets is modest or when there is no trusted family member to serve as trustee. Washington has pooled trusts operated by organizations like the Washington State Developmental Disabilities Endowment Trust Fund.
How a Special Needs Trust Works in Washington
When you create a special needs trust, you name a trustee who manages the funds. The trustee can be a family member, a professional trustee, or a bank. The trustee has discretion to spend money on the disabled person's supplemental needs — things that improve quality of life but are not covered by government benefits. The disabled person cannot directly control the trust funds. This separation is what protects their eligibility for Medicaid and SSI.
In Washington, the trust must be carefully drafted to meet federal and state requirements. If the trust gives the disabled person too much control over the assets, or if distributions are made for food or shelter (which government benefits already cover), it can jeopardize benefits. This is why working with an experienced Bellevue estate planning attorney is critical. A poorly drafted trust can cause more harm than good.
Why Bellevue Families Need Special Needs Trusts
If you have a child or family member with a disability, leaving them money directly in your will can accidentally disqualify them from the benefits they depend on. Instead of a direct inheritance, you can leave assets to a special needs trust. This ensures your loved one is cared for after you are gone, without losing Medicaid, SSI, or other needs-based programs. For families in Bellevue and across Washington, this is one of the most important estate planning decisions you can make.
Many parents in Bellevue also use a special needs trust alongside a revocable living trust. The living trust avoids probate for the main estate, and the SNT protects the disabled family member's inheritance. To understand the costs, see our Washington estate planning cost guide.
Frequently Asked Questions
01How much does a special needs trust cost in Washington?
An attorney-drafted special needs trust in Washington typically costs $2,000 to $5,000, depending on complexity. Pooled trusts may have lower setup fees but charge ongoing management fees. See our cost guide for details.
02Can I write my own special needs trust in Washington?
It is not recommended. SNTs must meet strict federal and Washington State requirements. A mistake in the trust language can cause the disabled person to lose benefits. An experienced Bellevue estate planning attorney ensures the trust is valid.
03What can a special needs trust pay for in Washington?
A special needs trust can pay for supplemental needs — things government benefits do not cover. This includes education, transportation, entertainment, personal care items, travel, and medical expenses not covered by Medicaid. The trustee cannot give cash directly to the beneficiary or pay for food and shelter.
04What happens to a special needs trust when the beneficiary dies?
For a first-party SNT, Medicaid must be reimbursed for the cost of care before remaining assets go to other beneficiaries. For a third-party SNT, there is no payback requirement, and remaining assets can pass to other family members.
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