Restricts a special needs trust to distributions for the named beneficiary alone.
In short. A sole benefit clause restricts a first-party special needs trust to distributions made solely for the benefit of the disabled beneficiary, so the trust does not disqualify the beneficiary from needs-based government benefits.
A first-party special needs trust holds the disabled beneficiary's own resources but is structured so those resources do not count against benefit eligibility. The sole benefit clause is the structural rule that makes that work: distributions must be made for the beneficiary alone, not for the beneficiary's relatives, friends, or household at large.
Families include a sole benefit clause when a disabled child or adult receives a personal injury settlement, an inheritance left outright by mistake, or other funds that would otherwise push them off SSI, Medicaid, or ALTCS. The clause keeps the funds usable for the beneficiary's quality-of-life needs without ending the benefit.
The sole-benefit rule is a federal Medicaid requirement under 42 U.S.C. § 1396p(d)(4)(A), and it controls Arizona's ALTCS program. AHCCCS policy materials enforce it strictly: distributions that primarily benefit anyone other than the disabled beneficiary will be counted against eligibility. Arizona's pooled trust option under AHCCCS Eligibility Manual policy is also constrained by the sole benefit rule.
Documents that include a sole benefit clause typically contain language along these lines: "All distributions from this trust shall be made for the sole benefit of [Beneficiary], and no distribution shall be made for the support of any other person." Descriptive only.
The most common failure is the trustee paying for items that incidentally benefit other household members — utilities, groceries, family vacations. AHCCCS will treat those as income to the beneficiary or as failure of the trust structure. A second failure is failing to obtain prior AHCCCS approval where required. A third pitfall is sloppy bookkeeping; the trustee should be able to defend every distribution as for the beneficiary alone.
This page describes how this clause works in general terms. It is not legal advice and not a drafting template. Whether a clause like this belongs in your plan depends on your family, your assets, and your goals. Drafting is performed by partner attorneys we work with.