When Do I Need a Special Needs Trust?

When Do I Need a Special Needs Trust?

A special needs or supplemental needs trust (SNT) is a tool that allows disabled persons to save up money for future care while not jeopardizing their eligibility for public benefits. Medicaid eligibility, for instance, restricts the amount of income and assets that people can have while still receiving benefits. More specifically, Medi-Cal and SSI rules limit recipients to possessing no more than $2,000 in assets. With an SNT, however, these individuals can own more than $2,000 in trust assets and still continue receiving Medi-Cal and SSI benefits.

An SNT can permit disabled persons to save lump sums of money that they receive, such as personal injury settlement awards or lump sums of retroactive disability benefits, without affecting eligibility for Medicaid and other programs. This is a first party SNT because the funds in the trust belong to the beneficiary of the trust, which is the disabled person. However, this type of SNT is subject to recovery by the state if the trust beneficiary passes away or terminates early. In these situations, the state of California can seek reimbursement from the SNT to pay for the total amount of the medical assistance that Medi-Cal paid for the trust beneficiary during his or her lifetime.

Another type of SNT is the third party SNT, which consists of assets that third parties place in the trust for its beneficiary, but which the beneficiary never legally owned. These assets are not subject to recovery by the state for Medi-Cal expenditures like first-party SNTs.

SNTs are an excellent alternative for family members who want to support persons with disabilities financially, but who also want to ensure that the persons can maintain their current receipt of public benefits. These individuals might be subject to a reduction in or the complete loss of Medi-Cal or SSI benefits if they received cash or in-kind support in the form of food or shelter from family members. The disabled persons then can use the SNT assets for items or experiences that they otherwise could not afford. Generally, these expenditures should not be redeemable for cash and should not constitute food or shelter to avoid running afoul of penalties under the Medi-Cal or SSI programs.

When you are facing disability-related legal issues that can be crucial to your future, the attorneys at Bonnici Law Group have the skills and knowledge to advise you of all potential options. We know how vital this support can be to you when you are unable to work. As a result, we are here to represent your interests throughout any dealings that you must have with your insurance company. For legal advice about your claim, please contact Bonnici Law Group at 619-259-5199 or help@bonnicilawgroup.com.

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