Which legal instrument is specifically designed for individuals with disabilities to preserve eligibility for public assistance?

The correct answer is the special needs trust, which is specifically designed to benefit individuals with disabilities while preserving their eligibility for public assistance programs. A special needs trust allows the trust beneficiary to receive funds from the trust without jeopardizing their access to government benefits like Medicaid or Supplemental Security Income (SSI).

The assets held in a special needs trust are not considered the individual's personal assets, thereby enabling them to maintain public assistance eligibility. This legal instrument is structured to ensure that any additional funds provided by family members or other sources do not count against the asset limits imposed by these assistance programs.

In contrast, a power of attorney allows one individual to act on behalf of another, but it does not address the specific needs related to maintaining public assistance eligibility. A guardianship agreement establishes a legal relationship where a guardian is responsible for making decisions on behalf of a person who is unable to make decisions for themselves, but it doesn't provide a mechanism to preserve eligibility for public benefits. An estate plan broadly outlines how one’s assets will be managed and distributed after death, and while it may include trusts, it does not singularly address the unique needs of individuals with disabilities as effectively as a special needs trust does.