Special Needs Trusts

Making Life Better For Persons With

Disabilities

Also called….

Supplemental Needs Trust SNT Disability Trust Qualifying Trust

Means Tested Public Benefits* Resource Limit:

$2,000.00

*such as Medicaid and SSI

Special Needs Trust

Allows a person with a disability to receive distributions from the trust without the trust being counted as a resource.

Maintains eligibility for public benefits while enhancing quality of life.

How?

Spend on Special Needs but not Support Trust money cannot be used:

To pay for the beneficiary’s food or shelter To give cash directly to beneficiary To give anything to the beneficiary that she

could convert to cash

Examples of Things Trust Monies Can Not Pay For

Mortgage Electric bill Real property taxes

What Can Trust Distributions Be Spent On? Cable bill Eyeglasses Training and

education Phone bill Movies Books on tape Transportation

Fresh flowers Vacation Companion Television Laundry service Pet expenses Travel

Magic Language

Trust intended to supplement, not supplant, public benefits

Types of trusts Self funded - uses

the disabled person’s own money to fund the trust. Example: personal injury settlement

Third party funded - uses money belonging to someone other than the disabled person to fund the trust. Example: grandparent leaves $ in trust for disabled person’s benefit

Payback

Self funded trusts must have payback provision

Money left in the trust at the death of the beneficiary goes first to pay back the state for Medicaid benefits

No obligation to conserve funds for the state

Types of Self Funded Trusts (d)(4)(A) Established by

parent, grandparent, legal guardian or court

Individual, stand alone

(d)(4)(C) Master Pooled Trust Established &

managed by a nonprofit organization

Example: Arc of Texas Master Pooled Trust

Over 65 Caution

Persons over age 65 who transfer their own money to a Special Needs Trust create a period of ineligibility.

Third party trusts

Somebody else’s money No pay back provision needed

No age restrictions Can be established during Grantor’s

lifetime (inter vivos) or by Will

Types of Distribution Standards

Strict - absolutely no distributions for food or shelter

Broad - distributions for food or shelter okay so long as beneficiary not disqualified for public benefits

Discretionary - any distribution okay; trustee has absolute and unfettered discretion to distribute or not distribute

Types of Trustees

Individual Potential conflict of interest with third party

funded trusts Has to keep up with continually changing

regulations Corporate

Keeps up with changes in regulations Professional management of funds