Special Needs Planning
If you have a loved one who is disabled and, as a result, is receiving governmental benefits (Medicare, Medicaid, SSD, SSI, HUD, etc.), then that person is a candidate for special needs planning. This type of plan will allow your beneficiary to receive an inheritance and maintain their benefits. It also allows the use of the inheritance for their needs, so long as it is not for certain items such as food or shelter.
The Third-Party Supplemental Needs Trust (SNT)
A third-party Supplemental Needs Trust is one created by someone other than the disabled person and in which third-party funds are transferred. In this type of trust, the disabled beneficiary cannot add his or her own money at any time. The trust is used to supplement the public benefits that the disabled person is receiving. These funds are not “available resources” for Medicaid eligibility purposes. They can be used for almost any purposes except shelter and food and no cash can be given to the disabled beneficiary. At the death of the disabled beneficiary, the assets will pass according to the wishes of the creator of the trust.
The First-Party Supplemental Needs Trust (SNT)
This trust may be created by a parent or grandparent of the disabled person or the disabled person themselves and must be created and funded before age 65. This trust is funded with the disabled person’s own funds, either income, inheritance or proceeds from a personal injury action. This trust must name the local Department of Social Services (“DSS”) or the State as the primary beneficiary at the death of the disabled person. Any large expenses from this trust must be approved by DSS first. It is always a good idea to seek approval from DSS before finalizing and funding an SNT.