One of the challenges when providing for loved ones with special needs is to do so in a way that they do not lose their eligibility for governmental assistance such Supplemental Security Income (SSI) or Medicaid. Recipients can lose eligibility for these programs if their assets exceed a certain level. One of the ways around this is to create a trust.There are multiple types of trusts, and the appropriate solution is dependent on your situation. For example, if your child was injured in an automobile accident, received a large insurance settlement from an insurance company and now requires special care, their insurance settlement could quickly be depleted if they do not receive SSI or Medicaid.

Here are a few types of trusts to consider:

Discretionary Special Needs Trust

• • Created by a 3rd party to benefit an individual.
  • The funds are managed by a 3rd party (trustee) who has discretion on how funds are spent.
  • Funds do not have to be paid back to the state at the time of the disabled person’s death and can go to other heirs.
  • There is no age or funding limit.

Supplemental Services Trust

• • Funds belong to the 3rd party.
  • Beneficiary must qualify as disabled through the State Department of Disabilities or County Board of Developmental Disabilities.
  • There is a maximum contribution amount.
  • Funds can only be used for supplemental services.
  • At the beneficiary’s death, 50% of remaining funds must be paid back to the state.

Special Needs Trust

• • Funds belong to a 3rd party or beneficiary
  • Created by parent, guardian, or court.
  • Created so the beneficiary can continue to receive governmental benefits.
  • Trust must include a payback provision, so at the time of the beneficiary’s death, the costs of all medical assistance paid by the state are reimbursed.
  • Funds can only be used to pay for care items and services not covered by public benefits.

Pooled Trust

• • Funds belong to a 3rd party.
  • Designed for small asset accounts.
  • Created by parent, grandparent, guardian or court.
  • Funds are administered by a not-for-profit organization under Section (501)(c)(3)).
  • No age limit.
  • At the beneficiary’s death, 100% of remaining balance goes to charity.

Which type of trust is appropriate for your loved one? Contact a Zinner trust expert today to find out.