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Special Needs Trusts

Special Needs Trusts. Making Life Better For Persons With Disabilities. Also called…. Supplemental Needs Trust SNT Disability Trust Qualifying Trust. Means Tested Public Benefits* Resource Limit: $2,000.00. *such as Medicaid and SSI. Special Needs Trust.

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Special Needs Trusts

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  1. Special Needs Trusts Making Life Better For Persons With Disabilities

  2. Also called…. • Supplemental Needs Trust • SNT • Disability Trust • Qualifying Trust

  3. Means Tested Public Benefits* Resource Limit:$2,000.00 *such as Medicaid and SSI

  4. Special Needs Trust • Allows a person with a disability to receive distributions from the trust without the trust being counted as a resource. • Maintains eligibility for public benefits while enhancing quality of life.

  5. How? • Spend on Special Needs but not Support • Trust money cannot be used: • To pay for the beneficiary’s food or shelter • To give cash directly to beneficiary • To give anything to the beneficiary that she could convert to cash

  6. Examples of Things Trust Monies Can Not Pay For • Mortgage • Electric bill • Real property taxes

  7. Cable bill Eyeglasses Training and education Phone bill Movies Books on tape Transportation Fresh flowers Vacation Companion Television Laundry service Pet expenses Travel What Can Trust Distributions Be Spent On?

  8. Magic Language • Trust intended to supplement, not supplant, public benefits

  9. Self funded - uses the disabled person’s own money to fund the trust. Example: personal injury settlement Third party funded - uses money belonging to someone other than the disabled person to fund the trust. Example: grandparent leaves $ in trust for disabled person’s benefit Types of trusts

  10. Payback • Self funded trusts must have payback provision • Money left in the trust at the death of the beneficiary goes first to pay back the state for Medicaid benefits • No obligation to conserve funds for the state

  11. (d)(4)(A) Established by parent, grandparent, legal guardian or court Individual, stand alone (d)(4)(C) Master Pooled Trust Established & managed by a nonprofit organization Example: Arc of Texas Master Pooled Trust Types of Self Funded Trusts

  12. Over 65 Caution Persons over age 65 who transfer their own money to a Special Needs Trust create a period of ineligibility.

  13. Third party trusts • Somebody else’s money • No pay back provision needed • No age restrictions • Can be established during Grantor’s lifetime (inter vivos) or by Will

  14. Types of Distribution Standards • Strict - absolutely no distributions for food or shelter • Broad - distributions for food or shelter okay so long as beneficiary not disqualified for public benefits • Discretionary - any distribution okay; trustee has absolute and unfettered discretion to distribute or not distribute

  15. Types of Trustees • Individual • Potential conflict of interest with third party funded trusts • Has to keep up with continually changing regulations • Corporate • Keeps up with changes in regulations • Professional management of funds

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