The Rothkoff Law Group can help you preserve your entitlement to public benefits. If you are injured or disabled, or if you are the parents of a child with special needs, you do not want an inheritance, an award, or a settlement to threaten your entitlement to public benefits. We help our clients to enjoy the benefits of their inheritances or settlements while at the same time keeping their public benefits.
If assets are given to, bequeathed to, or awarded to an injured or disabled person, their entitlement to public resources may be lost or reduced. Individuals with disabilities frequently wish to avoid the loss of public resources such as Supplemental Security Income (SSI) or Medicaid which otherwise would be available to them.
Supplemental Needs Trust (SNT)
Frequently a Supplemental Needs Trust can assist in the preservation of both the public benefits and the assets. A Supplemental Needs Trust is often referred to as Special Needs Trusts. There are two distinct types of Special Needs Trusts: a third party created special needs trust and a self created special needs trust.
“Third Party Created Special Needs Trust (SNT)”
Third party created SNT’s can be created by inter vivos or testamentary trusts and are funded by some one other than the beneficiary or his spouse, or they can be created by a testamentary trust created by and funded by the beneficiary’s spouse. The third party created SNT should be a fully discretionary supplemental care, spendthrift trust. It should not be drafted as a support trust. Third party created SNT’s are frequently used to provide for children or spouses with disabilities.
“Self Created Special Needs Trust (SNT)”
A self created SNT can help an injured or disabled person address the financial needs in excess of SSI and Medicaid benefits. Congress created two types of SNT’s that can be funded with the beneficiary’s assets.
These trusts permit the retention of a beneficiary’s resources in trust, including inheritances and personal injury settlements, without disqualifying the beneficiary from receiving SSI or Medicaid.
Both third party created and self created SNT’s are trusts that are created for the benefit of a beneficiary who receives SSI or Medicaid and intended to preserve the beneficiary’s eligibility of those benefits by not being considered a resource for eligibility purposes.
To avoid treatment of the special needs trust as a resource for SSI or Medicaid eligibility purposes, the beneficiary should not have the right to revoke the trust or direct the use of the trust assets for their own support or maintenance.
Why a Special Needs Trust?
A special needs trust is an effective way to help a person with an injury or disability who needs public benefits. A special needs trust will manage resources for the benefit of the injured or disabled person while maintaining the person’s eligibility for public assistance benefits. While governmental agencies recognize special needs trusts, they have imposed some very stringent rules and requirements upon them. It is vital that any family contemplating using a special needs trust consult an experienced attorney.
In addition to creating the trust document, it is extremely important that the family consider how the trust will be adequately funded. The funding of the trust must be realistic in relationship to the injured or disabled person’s needs. If the family has insufficient resources to adequately fund the trust, then the family should consider funding the trust with life insurance.