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Special Needs Trusts enable individuals with disabilities and/or their family members to set aside resources without impacting the individual’s eligibility for need based government benefits, specifically Supplemental Security Income (“SSI”) and Medical Assistance. At present, an individual receiving these entitlements is limited to $2000 in personal assets. Funds held in trust do not count against this limit. Thus, the trust can enhance the individual’s wellbeing.

In general, trust funds can be used for anything that improves the beneficiary’s quality of life, with the exception of food and shelter. Common uses of trust funds include transportation, clothing, counseling, medical expenses, vacations, and electronic equipment. It is imperative that the trustee exhaust all options for public support before expending funds and that the trust “Supplement rather than supplant” public benefits.

The trustee is charged with ensuring that the trust is administered to preserve benefit eligibility. Specifically, any and all disbursements must be permissible. The trustee is also responsible for ensuring that funds are invested in a responsible manner. We maintain relationships with experienced asset managers who completely understand our organizational mission.

First Party – A first party special needs trust is one that is established and funded with the beneficiary’s own assets. The most common scenarios are personal injury or other legal settlements, back social security payments or through an inheritance. A first party trust must contain a payback provision, the state has a lien on any funds remaining at the beneficiary’s passing. This lien is for the amount of medical assistance received over the course of the individual’s lifetime. Since the state has this financial interest, it is imperative that all expenditures be for the sole benefit of the individual. Failure to adhere to this can result in loss of benefits.

Third Party – A third party special needs trust is one that is settled with funds that are not the beneficiary’s own, most commonly through an inheritance or gift. The major distinction from a first party trust is that there is no state lien on remainder funds, so a properly drafted trust instrument should not contain a payback provision. As with a first party trust, funds should not be expended on food or shelter to avoid a reduction or loss of benefits

Pooled Trust – Funds are pooled for investment purposes, but separate accounts for each participant are maintained. Most commonly used when funds are limited, or when there is a charitable intent. When a participant in a pooled special needs trust passes away, any remaining funds in the account stay in the pool for the benefit of the surviving participants