Special Needs Planning

What are Special Needs Trusts?

A special needs trust is created with the intent of supplementing a disabled person’s income in order to pay for wants and needs not covered by government benefits.

If there are proceeds from a personal injury or medical malpractice settlement or judgment, then the special needs trust can be a lifesaver because the proceeds can be protected for the injured party while maintaining access to Medicaid, if necessary, to pay for the high cost of extended long term care.
In many states, the terms special needs trustand supplemental needs trustare used interchangeably. However, in the state of Massachusetts, a special needs trust specifically refers to a trust set up for a disabled person who already has his/her own assets, and a supplemental needs trust is set up for a person with disabilities by a third party such as a parent for such person.

In either case, it is extremely important to make sure that the trust meets the requirements of the government program(s) from which the disabled person currently benefits or is seeking benefits. If the trust does not comply with these requirements, the person with special needs (called the trust beneficiary) could lose his or her government benefits!

A supplemental needs trust can only be created for a person under the age of 65, and cannot be created by the individual for whom it would benefit. The trust usually covers things like education, clothing, recreation and uncovered medical care, etc. Because the assets were never owned directly by the person, someone who is a trust beneficiary of a supplemental needs trust can still receive benefits from government programs.

There are two forms of trust that allow someone to qualify for Medicaid and SSI: special needs trusts (sometimes referred to as payback trusts or d4a trusts) and pooled trusts (sometimes referred to as a d4c trust).

A special needs trust must be created by a parent, grandparent or legal guardian for a disabled person under age 65. Any money that remains in the fund after the beneficiary’s death must be used to reimburse (or pay back) Medicaid.

Our firm can outline the pros and cons of these two different types of trusts and advise you as to which one is best for you.

Should I Leave Money To My Child (Or Grandchild) With Special Needs?

Not without first talking to a qualified special needs (disability) lawyer experienced in special needs planning! Leaving money outright to your child may make them ineligible to receive government benefits and there may be no one with the legal authority to manage the funds. We can help you accomplish your goals without endangering your child or grandchild’s benefits. Trusts can be very helpful, such as the supplemental needs trusts discussed above.

Back to Services