It can be daunting for families with children or loved ones with special needs to navigate the public benefits landscape while planning for their needs. At Hynes Law Group, we arm our clients with the knowledge necessary to understand the various benefit programs.
An important step is recognizing what benefits your child or loved one is receiving (or may receive in the future) and determining whether they would be benefitted by a Special Needs Trust. Some public benefits that may require the use of a special needs trust are:
- Supplemental Security Income
- Federally Assisted Housing
- Supplemental Nutritional Assistance Program
- Division of Developmental Disability when paired with Medicaid
- Group Home
There are three main types of Special Needs Trusts: First-Party, Third-Party, and Pooled.
- A First-Party Trust is most often established under 42 U.S.C. §1396p(d)(4)(A), and is referred to as a “(d)(4)(A) Trust.” This type of trust is established with the assets of the person with a disability. There are specific state and federal criteria that must be followed, and if drafted incorrectly, will affect eligibility. For example, these trusts must have a payback provision, meaning that on the death of the individual, assets remaining in the trust must be used to pay back to the state for benefits paid on his or her behalf.
- A Third-Party Special Needs Trust is created with the assets of another individual. These trusts are funded with the assets of a third party for the benefit of the individual. Typically, you see these trusts established by the parents of the beneficiary. Having a third-party trust available allows family members to provide for the beneficiary in their respective wills without leaving money outright. Unlike the First-Party Trust, traditional Third-Part Trusts do not have a payback provision. The exception to this rule is when a Third-Party trust is established so that the grantor can obtain Medicaid benefits him or herself. This type of trust referred to as a Sole Benefit Trust has its own state and federal criteria that must be followed.
- A Pooled Trust is one that is administered by a nonprofit organization, such as PLAN/NJ. Pooled Trusts are a way to provide the advantages of a Special Needs Trust without having to actually establish a separate trust. Assets are placed in sub-accounts within the pooled trust to be used for the named individual but pooled together for investment purposes. Pooled Trusts are generally preferred when the amount going into the trust is not large.
At Hynes Law Group, we can help you navigate the special needs landscape and determine whether or not a Special Needs Trust is appropriate for you or your loved one.
To schedule a free 15-20 minute consult to determine if a Special Needs Trust is appropriate for you or a loved one, please click on the “contact us” tab or call the number above.