Special Needs Trusts

What is a Special Needs Trust?

A Special Needs Trust is a special kind of trust called a D4A Trust, set up in the US Code, which reads:

This sub-section shall not apply to any of the following trusts: The trusts containing the assets of an individual under the age of 65, who is disabled as defined in section 1382C sub-section A, sub-section 3 of this title, and which is established for the benefit of such individual by the individual, a parent, a grandparent, legal guardian of the individual, or court, if the state will receive all amounts remaining in the trust upon the death of such individual.”

That means the state would be the primary beneficiary. Remember, we are spending that money on the person for things they need during their life. This allows us to do that without affecting their current benefit. So, this can be part of a strategic estate plan for those who have special needs children or grandchildren.

If, for example, one of your children were to become disabled, you would want the option for your executor to deposit money into a Special Needs Trust. This then would not affect benefits such as, SSI (Supplemental Security Income) for income, Medicaid for health payments for a child if they are in need because of excess healthcare costs. They may have an SSI payment where they’ve been declared disabled and are receiving a check to pay for housing and food. You want to supplement their income but not kick their benefits off-line, because that payment is income dependent.  

A Special needs Trust can also be part of Medicaid Crisis Planning. If a senior or their spouse needs care, part of the money (in an unlimited amount), can be placed in a Special Needs Trust. That’s a non-countable asset transfer even within the lookback period of three years for assisted living, five years for nursing home Medicaid in North Carolina. This can help someone qualify for Medicaid benefits to pay for assisted living or nursing home care. They would still then be able to use their assets in a productive way to help their family.

Special Needs Trusts are a great planning tool for estate planning and elder law attorneys.

McIntyre elder law is a great resource for Special needs Trusts.

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Greg McIntyre JD, MBA Elder Law Attorney

written by:

Greg McIntyre

Elder Law Attorney


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