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, *such as Medicaid and SSI

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.

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

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

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

Magic Language Trust intended to supplement, not supplant, public benefits

Types of trusts Self funded - uses the disabled persons 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 persons benefit

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

Types of Self Funded Trusts (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

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

Third party trusts Somebody elses money No pay back provision needed No age restrictions Can be established during Grantors lifetime (inter vivos) or by Will

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

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