A commonly used trust for a disabled adult to protect Supplemental Security Income (SSI) benefits is a Special Needs Trust (SNT), also known as a Supplemental Needs Trust or a Medicaid Payback Trust. The purpose of an SNT is to allow a person with a disability to receive financial assistance while preserving their eligibility for means-tested government benefits such as SSI and Medicaid.
Here are some key points about Special Needs Trusts:
- Third-party SNT: A third-party SNT is established and funded by someone other than the disabled individual, such as a parent, grandparent, or guardian. This type of trust is commonly used to receive an inheritance, gifts, or other funds on behalf of the disabled person.
- Self-settled SNT: A self-settled SNT, also known as a First-Party Special Needs Trust or a d4A trust, is created with the disabled individual’s own funds, such as a personal injury settlement, inheritance, or other assets they may possess. This type of trust is subject to certain legal requirements and is typically used when the disabled person needs to protect their own assets and still qualify for SSI or Medicaid.
- Trustee: The trustee of an SNT has the responsibility to manage the trust assets and make distributions on behalf of the disabled individual. It is crucial to choose a trustworthy and competent trustee who understands the specific requirements of SNTs.
- Supplemental support: The SNT is designed to supplement, not replace, government benefits. The trustee can use the trust funds to pay for a wide range of goods and services that enhance the disabled person’s quality of life, such as medical expenses not covered by government benefits, education, personal care attendants, transportation, and recreational activities.
- Restrictions on distributions: The SNT must be carefully drafted to comply with the applicable laws and regulations governing government benefit programs. There are restrictions on how trust funds can be used to avoid jeopardizing the disabled person’s eligibility for SSI and Medicaid.
