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Special Needs Trust for Maintaining Medicaid or SSI Eligibility

Posted in Probate and Trust Litigation on June 2, 2016

If you are a parent of a special needs child (meaning disabled under the Social Security Act), you may consider establishing and funding a special needs trust.  A special needs trust is a legal trust that holds money for the purpose of supporting a special needs person financially after you die or can no longer manage money for your child.  You can establish a special needs trust for the benefit of a minor and/or an incompetent adult.

The special needs trust should be drafted by a qualified attorney that is familiar with your family situation.  It is common for parents to secure financial assistance for their child through Social Security (SSI) or Medicaid, or some other state benefits.  Once that child is on state assistance, the concern is that if the child is the beneficiary or recipient of an inheritance, or other countable resource, then state assistance may be terminated.

A special needs trust is specially crafted so that parents may properly provide inheritance and other monies for their child’s benefit, without losing SSI or Medicaid eligibility.  Occasionally, it is even possible to provide for future beneficiaries other than the state, should the child not utilize all monies in the trust.  The key is that proper language is used in the trust to ensure Medicaid or SSI eligibility, while allowing financial benefits to flow to the ward.

When properly established and funded, distributions may be made to the special needs child for items including, but not limited to:

Typically funds may not be used for food or shelter, otherwise state benefits may terminate.

Special needs trusts are complex, however, they provide an opportunity to give your child an inheritance and other financial protections without jeopardizing necessary state-supplied benefits.  Please do not hesitate or delay in inquiring whether your situation is ripe for a special needs trust.