Special Needs Trusts

What is a Special Needs Trust (SNT)?

A special needs trust (SNT) is a trust that will protect the beneficiary’s eligibility for government assisted benefits such as Medicaid and Supplemental Security Income (SSI). The beneficiary will not own the assets placed in the trust; therefore, they can remain eligible for benefit programs that have an asset limit. Examples of supplemental needs include expenses home care attendants, companions, and dental or medical expenses not covered by Medicare or Medicaid.

A first-party SNT, sometimes referred to as a “self-settled” trust, is funded with assets or income that belong to an individual with a disability who is also the beneficiary of the trust. Federal law requires that the beneficiary must be under the age of 65 when the trust is created and funded, the trust must be irrevocable and contain language expressing that Medicaid will be reimbursed upon the beneficiary’s death or upon termination of the trust, whichever occurs first; and the trust must be administered for the sole benefit of the beneficiary in order for Medicaid to not count it as an asset. Usually, this funding comes from a personal injury settlement or inheritance that the beneficiary receives directly.

A third-party SNT, is supplemental needs trust funded with assets belonging to another person other than the beneficiary. The beneficiary cannot use their own assets to fund the SNT. Funds used to create this SNT is usually from inheritances or life insurance payouts. The trust will not contain language directing a payback Medicaid upon the trust’s termination; instead, the person creating the trust is permitted to allocate funds when the beneficiary dies.

If you or your loved ones wish to discuss your options and establishing a Special Needs Trust, contact our team of experts and get started today!