Special Needs Trusts
Securing Your Future
A Special Needs Trust (SNT) improves a disabled person’s quality of life without endangering eligibility for government programs. A SNT allows a personal injury victim to receive a personal injury settlement/award without disqualification from public benefits, such as Supplemental Security Income or Medicaid. Federal law allows money to be placed into a SNT and that money is not a countable resource for purposes of qualifying for needs based public assistance programs (See 42 U.S.C. 1396p).
Disabled person under age 65
Disabled person over age 65
Third Party Special Needs Trust
Types of SNTs
(42 U.S.C. 1396p(d)(4)(A)): This trust is established with funds of the disabled person (typically a personal injury settlement/jury verdict) for the benefit of a disabled person who is under age 65 at the time of drafting the SNT. After the death of the beneficiary, the law requires that any funds remaining in the trust are first used to repay Medicaid for any disbursements made on behalf of the beneficiary while the SNT was in existence. After Medicaid is reimbursed, residual funds in the SNT are available to the heirs of the beneficiary.
(42 U.S.C 1396p(d)(4)(C)): This trust is commonly referred to as a “pooled trust.” Typically serving those over age 65 who cannot set up a traditional SNT based on their age, a pooled trust offers the same protection as the more conventional SNT discussed above.
This trust is established by someone else (parent, grandparent, etc…) for the benefit of a disabled person to provide comfort and happiness during their lifetime. When establishing the trust, the Grantor makes a decision as to where any remaining funds go once that disabled person passes away.