At Shober & Rock, we prepare Special Needs and Supplemental Needs trusts to permit our Client to maintain public benefits while retaining rights to private benefits either received in Court proceedings or from estates or other trusts. This is a very specialized area of the law that is constantly changing. Make sure that you seek the counsel of attorneys who actively work in this area.
Special Needs Trusts FAQ’s
What is a Special Needs Trust? Generally speaking, a Special Needs Trust is a Trust that is used by an individual on Medicaid or SSI but is not countable as an asset. It can be used for expenses not covered by the benefit program, such as special care planning, rehabilitation, and social activities. They are extremely technical and must be done carefully to pass review by Medicaid and Social Security.
How much does a special needs Trust cost? You can create one in your Will, which will cost nothing more than the Will costs. Setting one up involves getting an account and tax id number and instructing the trustees on the administration. In cases where the Court will authorize a Trust, a Petition must be filed. The costs can run into the thousands of dollars. The benefits, however, drastically outweigh the costs.
When do I need a special needs Trust? When you are on or think you will be on Medical Assistance, Medicaid or SSI, or any needs-based program.
Types of special needs trusts explained? Generally speaking, there are “first party” and “third party” trusts. First-party trusts are those set up with the Medicaid applicant’s assets and will eventually be “paid back” to the government after the applicant’s death. These are commonly called “payback trusts.” A third-party Trust is settled by a parent or loved one and is usually referred to as a “Supplemental Needs Trust” and, at the applicant’s death, can be distributed to other heirs or family members. There are also sole benefit trusts that can be established for individuals under 65 and disabled.
Social Security and SSI and special needs Trust? A special needs Trust can be used to protect valuable SSI and Medicaid eligibility. The Trust must be reviewed by the SSA initially and annually during its term.
Can I protect my injury settlement with a special needs Trust? Yes, so long as the Court agrees it will set up the Trust and authorize the payment of the settlement into the Trust. This is required to pay back Medicaid at the death of the recipient.
Can I protect my inheritance with a special needs Trust? This third-party Trust is straightforward to use, simply requiring the Will have the language of intention about the use of the funds, that they are to supplant and not replace the benefits of SSI or Medicaid. Too many people forget to consider the needs of their beneficiaries and unwittingly interfere with their ability to keep precious public health benefits.
What are supplemental needs Trust? Generally a third-party Trust that may be paid over to other beneficiaries at the death of the recipient rather than being paid back to the state.
What is third party special needs Trust? Set up with assets of someone other than the recipient.
What is a first-party Trust, and who can be a beneficiary? Set up with the assets of the recipient and done by someone acting on his behalf such as an Agent or a Court. The recipient will likely be someone who is on or who will require public benefits such as SSI or Medical Assistance.
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