Special Needs Trusts

Report
Special Needs Trusts
Making Life Better For
Persons With
Disabilities
Also called….
Supplemental Needs Trust
 SNT
 Disability Trust
 Qualifying Trust

Means Tested Public
Benefits* Resource Limit:
$2,000.00
*such as Medicaid and SSI
Special Needs Trust

Allows a person with a disability to receive
distributions from the trust without the trust
being counted as a resource.

Maintains eligibility for public benefits while
enhancing quality of life.
How?
Spend on Special Needs but not Support
 Trust money cannot be used:

To pay for the beneficiary’s food or shelter
 To give cash directly to beneficiary
 To give anything to the beneficiary that she
could convert to cash

Examples of Things Trust Monies
Can Not Pay For
Mortgage
 Electric bill
 Real property taxes

What Can Trust
Distributions Be Spent On?
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Cable bill
Eyeglasses
Training and
education
Phone bill
Movies
Books on tape
Transportation
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Fresh flowers
Vacation
Companion
Television
Laundry service
Pet expenses
Travel
Magic Language

Trust intended to supplement, not
supplant, public benefits
Types of trusts

Self funded - uses
the disabled person’s
own money to fund
the trust. Example:
personal injury
settlement

Third party funded - uses
money belonging to
someone other than the
disabled person to fund
the trust. Example:
grandparent leaves $ in
trust for disabled
person’s benefit
Payback
Self funded trusts must have payback
provision
 Money left in the trust at the death of the
beneficiary goes first to pay back the state
for Medicaid benefits
 No obligation to conserve funds for the
state

Types of Self
Funded Trusts

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(d)(4)(A)
Established by
parent, grandparent,
legal guardian or
court
Individual, stand
alone
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(d)(4)(C)
Master Pooled Trust
Established &
managed by a
nonprofit organization
Example: Arc of
Texas Master Pooled
Trust
Over 65 Caution
Persons over age 65
who transfer their own
money to a Special
Needs Trust create a
period of ineligibility.
Third party trusts
 Somebody
else’s money
 No pay back provision needed
 No age restrictions
 Can be established during Grantor’s
lifetime (inter vivos) or by Will
Types of Distribution Standards
Strict - absolutely no distributions for food
or shelter
 Broad - distributions for food or shelter
okay so long as beneficiary not
disqualified for public benefits
 Discretionary - any distribution okay;
trustee has absolute and unfettered
discretion to distribute or not distribute

Types of Trustees

Individual
Potential conflict of interest with third party
funded trusts
 Has to keep up with continually changing
regulations
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Corporate
Keeps up with changes in regulations
 Professional management of funds
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