Special Needs Planning for Individuals with Special Needs

For a loved one who is disabled, special needs planning can protect financial resources while ensuring eligibility for public benefits like Supplemental Security Income and Medicaid and improve the individual’s quality of life.   To receive these benefits, an individual generally cannot have resources in excess of $2,000.  Special needs planning involves creating a Special Needs Trust (SNT) to hold assets exceeding the resource limit for an individual.  The Trust assets can be used for the benefit of the trust beneficiary, while retaining public benefits eligibility.   There are Third-Party Funded (TPF-SNT) and Self-Funded Special Needs Trusts (SF-SNT).

The Division of Medical Assistance and Social Security Administration impose requirements when establishing a SNT.  The Trust must state it’s the clear intent of the person creating the trust (“Settlor”) that its assets will supplement, not replace, the public benefits the beneficiary receives and that public benefits are to be considered before any Trust distributions.  The Trustee, who manages and administers the Trust, must have complete discretion to make Trust distributions.

A TPF-SNT is funded by people other than the SNT beneficiary.  It’s often created as part of a family’s estate plan or fundraising efforts benefitting a special needs individual.   Most parents want to ensure that after their death, their children are provided and cared for.  However, leaving money outright to an individual with special needs may cause ineligibility for public benefits.  A TPF-SNT (not the individual outright) should be named as the beneficiary of retirement plans and insurance policies.

A SF-SNT is funded with the personal assets of, inheritances received outright by, and personal injury settlements received by the individual with special needs.   Currently, an individual cannot create this type of Trust for himself.  Additional requirements are imposed on SF-SNTs:  The court or trust beneficiary’s parent, grandparent, or legal guardian must create a SF-SNT;  it cannot be revoked after it’s signed; it must be used for the sole benefit of the beneficiary; an individual’s assets cannot be transferred into a SF-SNT after age 65; and upon the beneficiary’s death, a SF-SNT must reimburse Medicaid agencies an amount equal to the Medicaid benefits provided during the beneficiary’s lifetime, limited to the amount of the Trust’s remaining assets.

SNTs that are properly drafted and administered protect an individual’s eligibility and receipt of public benefits.  Contact the experienced special needs planning attorneys at Weaver, Bennett & Bland, P.A. to discuss your specific situation.

Crystal L. Welton is an estate planning, estate administration, elder law, and special needs planning attorney at Weaver, Bennett & Bland, P.A.  Contact Crystal at Weaver, Bennett & Bland, P.A. at (704) 844-1400.  The information contained in this article is general in nature and not to be taken as legal advice, nor to establish an attorney-client relationship between the reader and Crystal L. Welton or the law firm of Weaver, Bennett & Bland, P.A.

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Trusted since 1982, Weaver, Bennett & Bland, P.A. serves clients in North Carolina and South Carolina. Located in the town of Matthews between Mecklenburg and Union Counties in North Carolina, we’ve proudly provided legal services throughout Charlotte, Matthews, Mint Hill, Stallings, Indian Trail, Monroe, Marvin, Wesley Chapel, Weddington, Waxhaw, the Ballantyne area, and other surrounding communities in the Greater Charlotte region.  Our clients range from national corporations and major banking institutions to individuals and local companies.  We provide the best possible legal representation and advocacy, upholding our main client-focused cornerstones:  Helping. Planning. Protecting.