Special needs trusts

SPECIAL NEEDS TRUSTS: A primer

BY JESSE T. MOUNTJOY, ESQ.

SULLIVAN MOUNTJOY, PSC

ASpecial Needs Trust (sometimes called a “SNT” or “Supplemental Needs Trust” but herein termed simply a “Trust”) is a Trust created under a testamentary instrument (such as a person’s Last Will) or under an “Inter Vivos” (during a person’s lifetime) Trust Agreement, primarily to preserve government (public assistance) benefits for the beneficiary of such Trust. 1. Assets of the Trust are not counted as “countable resources” of the “disabled” beneficiary for eligibility for means-tested public assistance benefits.

The Trustee of the Trust is authorized (but not required) to makes discretionary distributions of income and/ or principal of and from the Trust in such a manner as to not adversely affect (i.e., disqualify) a disabled Trust beneficiary’s eligibility for public-assistance benefits; and

Assets from the Trust are then available to supplement the care and services needed for the beneficiary that are not provided by public assistance programs. 2. Public Assistance Benefits.

What do we mean by public assistance benefits? Examples to be protected by and with the Trust (and the Trustee’s discretion) include: • SSI and/or SSA; • Medicaid; • HUD/Section 8 housing allowances (in various states and sometimes local assistance programs). 3. First Party Special Needs Trust.

A First Party (sometimes called a “Self-Settled”) Special Needs Trust is a form of a solely discretionary, spendthrift Trust designed to preserve a disabled person’s eligibility for public assistance benefits. The public benefits may include means tested programs where eligibility is based on financial need (such as Medicaid, Supplemental Security Income (“SSI”) or food stamps, or even insurance programs where eligibility is based on criteria other than financial need, such as Medicare or Social Security Disability Income.

The Trust must be established by a disabled beneficiary, his or her parent, grandparent, guardian or the district court and can only be established for individuals under the age of 65.

Any assets that remain in the Trust at the Trust beneficiary’s death must first be used to repay Medicaid for any payments made on behalf of the beneficiary during his or her lifetime.

CONTINUED ON PAGE 8

From theBoardroom to theCourtroom. From Personal Planning to Personal Injury. We CoverItAll.

RONALD M. SULLIVAN JESSE T. MOUNTJOY MICHAEL A. FIORELLA R. MICHAEL SULLIVAN BRYAN R. REYNOLDS MARK W. STARNES CHARLES E. MOUNTJOY L. CHRISTOPHER HUNT

FRANK STAINBACK of Counsel JAMES M. MILLER of Counsel