Special Needs Planning

Important Steps to Protect Your Special Needs Loved Ones

For those with a special needs child or grandchild, taking steps to ensure a safe, happy, and healthy future is even more important due to the additional hurdles they may face. To help provide a prosperous future for your special needs child or grandchild, in most cases, a Special Needs Trust is an important tool.

A special needs trust is drafted with the intent that trust assets are not considered as “available resources” in determining a disabled person’s eligibility for needs-based benefits (such as SSI and Medicaid).

Third Party SPECIAL NEEDS TRUST

One of the first things you can do in your estate planning is establishing a Third Party Special Needs Trust (SNT) for the benefit of your child or grandchild or other special needs beneficiary. An SNT is a special type of trust designed to set aside money and property for the benefit of a beneficiary who may qualify for public assistance for medical and other care expenses because of his or her disabilities. This type of trust can be added to an existing trust, or it can be drafted as a standalone trust.

Because most government programs providing aid to disabled individuals have strict requirements about how much money and property a person can own and how much money they can receive on a regular basis, it is important to make sure that any inheritance your special needs child or grandchild receives is structured in a way that will not disqualify them from receiving the government benefits. Even if your child or grandchild is not currently receiving government benefits, this does not mean that they will never receive them. When planning for their future, we want to make sure that we are maximizing all opportunities available to them, not limiting those opportunities. To accomplish this, it is crucial that the trust be carefully drafted by an attorney who is familiar with the eligibility requirements for government benefits.

First Party SPECIAL NEEDS TRUST

A First Party SNT holds property which is transferred from the beneficiary (such as an inheritance, worker’s compensation award, personal injury settlement, etc.). It may also be referred to as a “Self-Settled,” or “Medicaid Payback,” or “(d)(4)(A)” Trust.

In a First Party SNT, federal law allows the property of a disabled individual to be placed in a trust and the resulting trust assets will not be considered an “available resource” for purposes of SSI and Medicaid eligibility if certain requirements are met. In a First Party SNT, federal law allows the property of a disabled individual to be placed in a trust and the resulting trust assets will not be considered an “available resource” for purposes of SSI and Medicaid eligibility if certain requirements are met (as explained in POMS SI 01120.203 B1). 

The First Party SNT must:

  • contain the assets of an individual under the age of 65 and disabled;
  • be established by the beneficiary, the beneficiary’s parent, grandparent, legal guardian, or a court; and
  • provide that the State will receive all amounts remaining in the trust upon termination up to an amount equal to the total medical assistance paid on behalf of the individual under a State Medicaid plan.


The First Party SNT must also be:

  • irrevocable;
  • established for the sole benefit of the primary beneficiary; and
  • under the complete control of someone other than the beneficiary. Ensuring that your special needs loved one is cared for after you are gone is likely a top priority for you. Our priority is to assist you in crafting a plan that will ensure continued support and prosperity for your loved ones.
 
Ensuring that your special needs loved one is cared for after you are gone is likely a top priority for you. Our priority is to assist you in crafting a plan that will ensure continued support and prosperity for your loved ones.

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