A Special Needs Trust is designed to provide for individuals with disabilities and allow for certain additional financial benefits or protections. Special Needs Trusts can take several forms, and each carry special requirements. There are no limits on how much money can go into these trusts, and help defray the costs of adapting daily life for the beneficiary’s needs.
Several types of Special Needs Trusts are available, depending on the needs of the Beneficiary and that of the individual establishing the trust.
1. Self Settled or First Party Trust: If the trust meets the requirements of the Title 42 of the United States code Section 1396p(d)(4), then the resources in the trust don’t count towards Medicaid qualification assets. To qualify, this trust is established by a parent, grandparent, guardian or the court on behalf of the individual with special needs. It is funded by the individual’s resources, such as earnings and inheritance. The beneficiary must qualify as disabled, and be under the age of 65. Upon the beneficiaries’ death, the State is to be paid from the trust for services provided during the individual’s life through Medicaid
2. Third Party Special Needs Trust: A Third Party Trust is set up by a benefactor with no legal obligation to the individual benefiting from the trust. These trusts do not require pay-back to the State. Anyone may fund these trusts on behalf of the disabled beneficiary.
3. Supplemental Needs Trust: The Supplemental Needs Trust is designed to hold any title to property on behalf of the beneficiary. This trust also helps maintain the beneficiary’s eligibility for public assistance while providing supplemental resources to these benefits. Like the Self Settled Trust, the beneficiary should be under the age of 65 and have no direct control or access to funds. Additionally, the trust should be managed to requirements on behalf of the beneficiary, including all tax documents submitted as appropriate for distributions of funds.
Trusts can be designed for nearly any need or set of circumstances. It is important to ask all of the right questions to ensure the trust meets current and potential future needs of both the beneficiary and the individual establishing the trust. It is best to sit down with an experienced representative who knows the right questions.
Trust law can be complex, particularly when providing for an individual with special needs. The process is often emotional and stressful. Eileen Kerlin Walsh P.C. and Associates are here to help. Please call 708-448-5169 to schedule a consultation.