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Bill

SB 85

AN ACT relating to designating a special needs trust to receive state-administered retirement benefits.

2026 Regular Session Introduced by Danny Carroll and 1 co-sponsor

Kentucky SB 85 permits state retirement plan participants to name special needs trusts as beneficiaries, protecting disabled dependents' government assistance eligibility.

signed by Governor (Acts Ch. 18)
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Bill Summary · SB 85

Legislative bill overview

SB 85 allows Kentucky state retirement plan participants to designate a special needs trust as a beneficiary to receive their state-administered retirement benefits upon death. This provides an estate planning option specifically designed for participants with disabled beneficiaries who need continued financial support while preserving eligibility for means-tested government assistance programs.

Why is this important

Families caring for disabled dependents face a critical challenge: direct inheritance can disqualify beneficiaries from Supplemental Security Income (SSI) and Medicaid due to asset limits. By permitting special needs trusts to receive retirement benefits, this bill enables parents and workers to provide financial security for disabled family members without triggering loss of essential government benefits—a significant practical concern for Kentucky families.

Potential points of contention

  • Trust administration complexity: Special needs trusts require professional management; beneficiaries without family oversight might need public trustee services, potentially creating state administrative burdens or costs
  • Scope clarification: The bill doesn't specify whether all state retirement systems are covered, whether survivor benefits are included, or how the trust arrangement affects ongoing benefit calculations
  • Interaction with federal benefits: While intended to preserve SSI/Medicaid eligibility, actual compliance depends on proper trust drafting; unclear guidelines could lead to unintended disqualification if beneficiaries don't use approved special needs trusts

Compiled from official sources — confirm details with the bill’s official record.

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