Koberlein Law Firm, PLLC, 1423 S. Higley Rd., Suite 127 Mesa, AZ 85206

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SPECIAL NEEDS TRUST

WHAT IS A SPECIAL NEEDS TRUST?

WHAT IS A SPECIAL NEEDS TRUST?

Family members and friends of those with special needs understand that the proper care is essential to the happiness of the individual with special needs. In order to plan for that happiness, some people hire an estate planning attorney or wills and trusts attorney to set up a supplementary trust called a special needs trust (SNT).

 

Why not just leave them a sum of money? One reason is because people with special needs may qualify for one or all government means-tested benefits like Social Security Disability (SSDI), Supplemental Security Income (SSI), Arizona's Medicaid (AHCCCS) and Medicare. Depending on the benefit, an individual with special needs can be disqualified for having a certain amount of funds or access to a certain amount of funds. An estate planning attorney can draft a special needs trust that supplements the care for the individual by disallowing the individual's access to the funds of the trust and giving sole discretion to the trustee to provide for the supplemental care of the individual with special needs.

 

There are generally two types of special needs trusts that an estate planning attorney can draft: A first-party SNT and a third-party SNT. A first-party SNT is funded by the assets of the individual with special needs. Often times a first-party SNT will result from auto accidents where the individual becomes disabled. An estate planning attorney ensures that a first-party SNT is irrevocable, and upon the death of the beneficiary of the SNT, that any remaining assets within the special needs trust are subject to a payback in favor of the state's Medicaid that has provided medical assistance to the beneficiary.

 

In contrast, a third-party SNT is typically funded by parents or grandparents of the beneficiary. The beneficiary does not have any control or access over the assets within the trust, but the assets are to be used to supplement the care not provided by government benefits

for which the individual with special needs qualifies. This is where a qualified estate planning lawyer must take care in ensuring that a special needs individual is not disqualified by poor estate planning.

 

Generally speaking, these trusts are set up to ensure a loved one who has special needs is able to maintain a happy and productive life and do so without jeopardizing the government benefits available to him or her.