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    Special Needs or Supplemental Needs Trusts

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    cstocksg1
    This document discusses special needs trusts, which are trusts created to provide funds for disabled individuals without disqualifying them from government benefits. It defines key terms like grantor and beneficiary. It explains that under US code, special needs trusts are not counted as resources for determining eligibility for SSI or Medicaid. The purpose of these trusts is to provide funds for expenses beyond basic needs like housing, food or clothing covered by benefits. The document outlines who can establish different types of special needs trusts, how they are funded, and provides examples of allowable versus non-allowable purchases using trust funds.

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    Special Needs or Supplemental Needs Trusts

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    cstocksg1
    224 views13 pages
    This document discusses special needs trusts, which are trusts created to provide funds for disabled individuals without disqualifying them from government benefits. It defines key terms like grantor and beneficiary. It explains that under US code, special needs trusts are not counted as resources for determining eligibility for SSI or Medicaid. The purpose of these trusts is to provide funds for expenses beyond basic needs like housing, food or clothing covered by benefits. The document outlines who can establish different types of special needs trusts, how they are funded, and provides examples of allowable versus non-allowable purchases using trust funds.

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    This document discusses special needs trusts, which are trusts created to provide funds for disabled individuals without disqualifying them from government benefits. It defines key terms like grantor and beneficiary. It explains that under US code, special needs trusts are not counted as resources for determining eligibility for SSI or Medicaid. The purpose of these trusts is to provide funds for expenses beyond basic needs like housing, food or clothing covered by benefits. The document outlines who can establish different types of special needs trusts, how they are funded, and provides examples of allowable versus non-allowable purchases using trust funds.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    224 views13 pages

    Special Needs or Supplemental Needs Trusts

    Uploaded by

    cstocksg1
    This document discusses special needs trusts, which are trusts created to provide funds for disabled individuals without disqualifying them from government benefits. It defines key terms like grantor and beneficiary. It explains that under US code, special needs trusts are not counted as resources for determining eligibility for SSI or Medicaid. The purpose of these trusts is to provide funds for expenses beyond basic needs like housing, food or clothing covered by benefits. The document outlines who can establish different types of special needs trusts, how they are funded, and provides examples of allowable versus non-allowable purchases using trust funds.

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    © All Rights Reserved
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    of 13

    Special Needs or

    Supplemental Needs
    Trusts
    Jerry L. Basford
    November 8, 2010

    What is a trust?
    A trust is a legal document containing
    instructions directing the management and
    distribution of the resources placed in the
    Trust.
    Grantor-person creating or funding the
    trust
    Beneficiary-person receiving the benefit or
    on whose behalf the trust was created.

    1993 Omnibus Budget and


    Reconciliation Act
    Title 42 of the United States Code
    Section 1396(d)(4).
    If the trust meets the U.S. Code
    requirements, the trust is not a
    countable resource for SSI or Medicaid
    qualification purposes.
    Neither will a transfer of assets to a
    d(4)(A) trust give rise to a period of
    ineligibility for either SSI or Medicaid.

    What is a Special Needs


    Trust?
    a special needs trust (SNT) is a legal
    document that is created for a person
    who, because of physical or mental
    disability, or chronic or acquired
    illness, at under age 65, is receiving
    federal and state government benefits
    for medical care and daily living
    needs.

    What is the Purpose of a


    Special Needs Trust
    Provides a source of funds without
    disqualifying the beneficiary from
    receiving government benefits.
    Inheritance or gifts could reduce or
    eliminate the beneficiarys eligibility for
    such benefits because he or she may
    only have a maximum of $2,000 in his
    or her own name to qualify for them.

    When should a Special


    Needs Trust be
    established?
    Generally no later than the
    beneficiarys 65th birthday.

    Who can establish a


    Special Needs Trust?
    Three main types of SNTs
    1. Family-Type Trust
    2. Pooled Trust
    3. Court Ordered Trust

    Family-Type Trust (Third


    Party Trust)
    Any third party can establish a trust, but usually
    the parents provide the money to set up the
    trust.
    The only person that cannot place money into
    this type of trust is the disabled person.
    Disadvantage:
    the money cannot be used for housing, food, or
    clothing.
    Pay-back provision may apply for Medicaid
    services provided during the life of the
    beneficiary.

    Pooled Trust
    Anyone, including the individual with the disability can put
    money into a pooled trust, however, it must be established by a
    non-profit association.
    The trust pools the funds of many beneficiaries, manages and
    invests them. Each individual has his/her own account.
    Advantages:
    They are willing to handle much smaller accounts than a bank or
    trust company
    Disadvantages:
    the money cannot be used for housing, food, or clothing.
    Non-profit has control of the disbursements.
    Any money left in the trust after the beneficiary dies stays in the
    trust to help others with disabilities.

    Court-Ordered Special
    Needs Trust
    Used in special situations where the disabled
    person has inherited money or received a court
    settlement and that money would otherwise
    disqualify them from receiving government
    benefits.
    Disadvantage:
    Remaining funds will be used to pay back the
    state of residence for whatever medical
    assistance the government provided to the
    individual after the trust was set up.

    How to fund SNTs


    Funding can come from savings,
    investment in stocks, bonds, or mutual
    funds, Certificates of Deposits,
    Individual Retirement Accounts, real
    property or standard government
    benefits.
    Family members or friends can name
    the trust as a beneficiary in their will.

    Special Needs Trust Funds


    may not be used for basic
    needs
    Housing, medical treatments
    covered by Medicaid, food or
    clothing may not be
    purchased with SNTs

    Allowable purchases using


    trust funds
    The money can be used to purchase a
    home, which can then be rented to the
    beneficiary. The trust can pay for furniture,
    medical and health costs not covered by
    Medicaid, vacations, summer camp, trips,
    travel companions, or other recreation or
    entertainment. It can be used to buy
    sporting equipment, computers, haircuts,
    camera, bowling shoes (but not regular
    clothing), emergency legal costs, and
    funeral and burial expenses.

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