A “special needs trust” (or often referred to as a “supplemental” needs trust) is a trust used for people who have a disability that will allow them to qualify for public assistance benefits such as Medicaid and Supplemental Security Income (SSI).
When a person applies for Medicaid and/or SSI benefits, he or she must disclose all assets owned and income being received. In addition, if the person is a beneficiary of any trust, the details of the trust will be reviewed by the agency that administers the public benefit program for which the person is trying to qualify.
Unless the trust meets certain strict criteria, the principal of the trust will be considered to be an “available” resource to the person. This means it will count towards the maximum amount of resources the person can have and may prevent that person from qualifying to receive SSI or Medicaid long-term care benefits. For SSI and Medicaid in most states this is no more than $2000.
If it is determined that the person has available resources that exceed the maximum amount allowed, he or she will be denied SSI or Medicaid assistance until the excess resources disappear, or are “spent down” to an amount below the maximum allowed.
However, if the special needs trust is properly drafted, then the trust will be exempt and the assets held in the trust will not count toward the $2,000 limit.
Special needs trust planning can be complicated with many traps for the unwary. An estate planning attorney with experience in this area should be consulted in advance of making any transfers to or for the benefit of a disabled child or adult.
Please contact Attorney John Polgrean at email@example.com or (603) 883-0797 to set up an estate planning consultation if you or any of your loved ones have questions or concerns about planning for a disabled child or other loved one.