Special needs trusts are set up to allow people with special needs to qualify for or maintain “needs-based” government benefits such as Medicaid and Supplemental Security Income (“SSI”). In general, eligibility for these programs requires that a person’s assets held in a special needs trust will not be seen as “countable” for Medicaid and SSI eligibility. However,
those assets held in the trust can still be used to supplement needs-based government benefits and provide many of the good things in life such as electronics, companionship, vacations, hair care, dental, education, etc.
Two Types
Self-settled is when a person sets up their own special needs trust for their own benefit.
The third party is when someone sets up a special needs trust for someone else.
Basic Rules
There are specific requirements for each of the types of special needs trusts, however, they should follow the following rules.
- The trustee shall only supplement government benefits and never displace government benefits.
- The Trustee shall not distribute cash or property directly to the beneficiary
- The beneficiary may not demand payment or that assets be distributed to the trust.
- Never give the disabled beneficiary a general or limited power of appointment.
- The trustee shall not make any distributions that would disqualify the beneficiary from needs-based government benefits
- Trust assets are not available to the beneficiary
- The trustee shall not allow the beneficiary to co-mingle funds with the trust assets.
- The trustee shall not reimburse the beneficiary directly for purchases he or she makes.
- The Trustee may pay directly for services, provided the Primary Beneficiary does not receive any assets as a result of such expenditure that can be converted to cash.
- The Trustee may distribute a gift certificate directly to the Primary Beneficiary if the certificate is nontransferable and nonrefundable and cannot be converted to cash.
If you have a situation where you think a special needs trust would benefit you please contact us at 435-674-2564 and ask for Travis Christiansen.
