Moving the Special Needs Trust Beneficiary and Special Needs Planning to Another State

Relocating to a new state can be a daunting undertaking, especially when it involves moving a special needs trust beneficiary and the associated special needs planning. Whether the move is for personal reasons, better healthcare prospects, or a change in family circumstances, moving to another state requires comprehensive consideration for the individual with special needs.

Understanding Special Needs Trusts

A special needs trust (SNT) is a planning arrangement for individuals with disabilities. Its purpose is to provide for their supplemental needs while preserving eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI). Special needs trusts are intended to enhance the quality of life for the beneficiary without jeopardizing their access to meanstested government benefits.

There are two types of SNTs, commonly known as first-party and third-party SNTs, depending on how they are funded. A first-party SNT is funded with the SNT beneficiary’s own assets, usually obtained from an inheritance, a court settlement or from assets that belonged to the beneficiary before the SNT was established.

A first-party SNT must contain a provision that the Medicaid program will be reimbursed dollar for dollar for all expenditures made by the Medicaid program on behalf of the beneficiary during the beneficiary’s lifetime before any assets can be distributed to anyone else in accordance with the terms of the trust.

A third-party SNT is funded with assets that belong to someone else, usually a parent or grandparent. There is no requirement that Medicaid be paid back from third-party SNTs. A thirdparty SNT can be a stand-alone trust or it can be a subtrust in someone else’s trust or last will and testament.

An individual with disabilities also may have assets placed in a first-party pooled SNT or a third-party pooled SNT. A separate account is maintained for each pooled trust beneficiary. The assets are pooled by an administrator for investment and management purposes.

Crucial Considerations Before the Move Prior to the move, it’s important to consider several factors:

1. Although SSI and Medicaid are governed by federal law, every state has its own set of laws governing trusts and eligibility for those benefits. Accordingly, it may be necessary to amend the trust to conform to the law of the new state.

2. If a guardian or conservator was appointed it may be necessary or advisable to transfer the guardianship or conservatorship to the new state. Similarly, if the special needs trust beneficiary previously executed a power of attorney and/or a health care proxy it may be advisable to create those documents in accordance with the laws of the new state.

3. The beneficiary may require new medical providers and support programs. Consequently, it is important to search for quality healthcare in the new state.

4. The beneficiary may need to move to a group home or a supervised apartment, or may be required to be enrolled in a school or classes that accommodate students with special needs. Housing and school options should be carefully researched.

5. Financial Consideration: The move may result in changes in the cost of living and taxes. Avoid surprises by investigating the financial impact of the move.

Achieving a Smooth Transition

1. Consult with an attorney with extensive experience in special needs planning and trust administration in the new state. By reviewing the existing SNT the lawyer can provide advice regarding trust modifications if necessary, and ensure compliance with the laws of the new state.

That attorney should also be able to provide guidance regarding the beneficiary’s eligibility for government benefits in the new state as well as the advisability of transferring the guardianship or conservatorship or preparing a new power or attorney and health care proxy for the individual with special needs.

2. Explore local disability advocacy groups and support services for the special needs trust beneficiary in the new locale.

3. Consider whether the move requires a change in financial management of the special needs trust. For example, it may be necessary to appoint a new trustee if the current trustee does not have the power or desire to serve as trustee in the new state. The current budget, if any, that was implemented in the old state may need to be adjusted based on the cost of living in the new state.

4. Ensure that medical records are transferred to the new medical providers and that school records are sent to the school in the new community.

Conclusion

Moving a special needs trust beneficiary and the special needs planning to another state requires careful consideration of the legal, financial, educational and medical consequences resulting from the transition. By seeking legal counsel, support programs and medical providers in the new state prior to the move, a smooth transition can be achieved.

SpecialCare is a program developed by Massachusetts Mutual Life Insurance Company (MassMutual) that provides access to information and resources to families with dependents, of any age, who have special needs. The Special Care Planner is a title used by MassMutual financial professionals who have received advanced training and information in estate and tax planning concepts, special needs trusts, government programs, and the emotional dynamics of working with people with special needs and their families.

Shirley B. Whitenack, Esq. is not affiliated or associated with MassMutual.

The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees, and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

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