First-Party Special Needs Trust
A trust established for the sole benefit of a disabled person. It must be funded before the person reaches age 65. It can be established by the disabled person (who has capacity), a parent, grandparent, guardian, or court. The administration of this trust is complex and allowable distributions may be complicated. The trust must provide for reimbursement on the termination of the trust to any states whose Medicaid programs paid for any medical expenses of the disabled trust beneficiary.
Pooled First-Party Trust
This trust is very similar to the First-Party Special Needs Trust, except it is administered by a trust company. On the death of the disabled beneficiary, if the remaining funds are not paid to the state, they might be retained by the trust company to benefit that organization.
For those who were disabled before age 26, they or their legal representative may open an account which may hold fund that are not counted toward their eligibility for certain means- based benefits. Anyone may contribute to the account, up to $15,000.00 per year, with a maximum amount of $100,000.00 (to remain exempt for SSI purposes). Growth of the funds are also tax-free if spent on qualified disability expenses (which are also important for means-based benefits eligibility purposes). Funds remaining in the account on the owner’s death are to be paid to the to any states whose Medicaid programs paid for any medical expenses of the disabled person. For more information, check out www.ablenrc.org.
Third-Party Special Needs Trust
This option is the most favorable and can be used for a disabled beneficiary of any age. However, it requires advanced planning. Rather than give a gift or inheritance directly to someone on means-based benefits, third parties can give those assets to a trust to be used for that disabled beneficiary’s benefit. With the proper trust terms and administration, it should not impact the disabled beneficiary’s eligibility for means-based benefits. The trust does not include a payback provision for the beneficiary’s Medicaid expenses.
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|1st Party SNT
|3rd Party SNT