Special Needs Planning
As a member of the Academy of Special Needs Planners, the Bell Law Firm, PA understands the unique needs of special needs families, and works closely with these families and individuals to help them preserve their entitlement to public benefits. An inheritance, an award or a settlement can threaten the public benefits of an individual with special needs. We focus on helping these clients keep their public benefits, and provide them an opportunity to enjoy the inheritance or settlement they have received.
If an individual has public benefits such as Supplemental Security Income (SSI) or Medicaid, then an award increasing their assets may reduce or eliminate these public benefits. For this client a Special Needs Trust can assist them in the preservation of both the public benefits and the awarded assets. The Bell Law Firm, PA works with clients in creating different types of special needs trusts including third-party special needs trusts and self-settled special needs trusts.
Special Needs Trusts (SNTs)
There are different types of special needs trusts, and the three most common types are:
- Self-settled special needs trust or a d(4)(A) trust
- Third party special needs trust
- Pooled special needs trust or a d(4)(C) trust
The self-settled SNT is funded with the assets of the injured or disabled person, and this person is also the beneficiary. The income and the assets of the trust must be used for the injured person’s special needs. The beneficiary is allowed to remain on SSI or Medicaid, but if there are any assets remaining in the self-settled SNT at the death of the beneficiary, then these assets must be used to payback the state Medicaid agency for any benefits received.
Third party SNTs are usually funded as part of a parent, friend or family member’s estate planning efforts, and they can be created at death or while living. They must be created by someone other than the beneficiary or their spouse, but a spouse can create a testamentary trust (on their death) to fund a third party SNT. This third party SNT is drafted as a fully discretionary trust, and it should not be drafted as a support trust. The assets within the third party SNT will not affect the beneficiary’s public benefits, and they are used to enhance the quality of life of the beneficiary. At The Bell Law Firm, PA it is common for a parent to include plans for a third party SNT within their estate planning to provide for children or spouses with disabilities.
A pooled special needs trust is created by a nonprofit organization, and separate accounts are created for the benefit of the disabled individuals. The funds within the trust are used to support the beneficiary without disrupting their public benefits. Any assets remaining in the pooled trust at the beneficiary’s death can be retained by the pooled trust to assist other disabled persons, or they are used to reimburse the state for Medicaid benefits provided to the disabled person.
A special needs trust is an effective way to help an individual with an injury or disability who also needs public benefits. The special needs trust will manage resources for the benefit of the disabled individual, and the trust will maintain the individual’s eligibility for public assistance benefits. The special needs trusts are recognized by government agencies, but they must follow specific rules and requirements. At The Bell Law Firm, PA we work closely with families to understand their future needs, and we also understand how to effectively use special needs trusts to meet their objectives.
In addition to creating the special needs trust, the individual or family must consider how the trust will be adequately funded. The funding plans must be consistent with the needs of the disabled person. The Bell Law Firm, PA will work closely with the individual or family, and their individual advisors, to ensure the proper funding plans are in place for the special needs trust.