Special Needs Trusts

This information is the result of my research and discussions with many professionals that routinely deal with the issues and circumstances surrounding Special Needs Trusts. It is not intended to provide legal or financial advice but to discuss the pertinent questions that I had regarding our particular situation. Each situation dealing with individuals with disabilities and their financial well being is unique and it is my opinion and recommendation that anyone in a similar situation or with a similar need consult with only qualified and licensed individuals and attorneys who are well versed in the establishment of this financial planning tool. With this said, it is often difficult to obtain professional advice without the incurrence of fees. Therefore, I have written this article as a general primer on our experience with our daughters need for a Special Needs Trust.

Our daughter Katie received an offer to settle her legal suit with the Hospital prior to the jury verdict. This offer was a substantial amount of money that would be destined to provide Katie with the special necessities that she would require throughout her life. When this occurs it is generally more money than most of us will see at a single time during our lives. It also opens up many other questions and responsibilities that we may have no idea of how to deal with. Questions surrounding sound fiscal management, investment decisions, applicable laws, taxes, continuity of benefits such as SSI and medical care, estate planning, guardianship and others that arise on a regular basis.

Common knowledge is the fact that government programs - in the form of Supplemental Security Income (SSI) and Medicaid – are very important for people with disabilities in need, as they provide cash benefits as well as important medical coverage and long- term supports and services. The income level and financial resources of an individual with a disability, or family who is applying on behalf of their child with a disability, must not exceed a certain level in order qualify for these government benefits. Benefit recipients are allowed to retain only a total of $2,000 in assets, with some exceptions. A person with a disability receiving SSI, who accumulates more than $2,000 in cash resources, may lose SSI and, possibly, Medicaid.

However, government cash benefits provide only for the bare necessities: food, shelter, and clothing. They amount to less than a federal poverty level income. As we all know, there are more things and activities beyond these basics that add quality to life. For a parent planning for the future of their child with special needs, this poses a problem. When parents are able to care for their child, they provide the extras beyond the bare necessities to make their child’s life comfortable. But who will provide those resources when they are not there to do so? If parents leave any assets to their child who is receiving government benefits, they run the risk of disqualifying the child from receiving government benefits. If they leave assets to another family member or other person for the care of the child, they open other avenues of risk where the child might not get the benefit of those assets, such as divorce, bankruptcy, lawsuits, and financial mismanagement.

The only method that we have found of making sure that the award actually has a chance of reaching Katie without interfering with or preventing her from participating in other government programs such as Supplemental Social Security is through the legal device known as a Special Needs Trust. The Special Needs Trust is developed to manage individual’s financial resources while maintaining the individual's eligibility for public assistance benefits. The trust is managed by a trustee on behalf of the person with the disability.

A Special Needs Trust is a legal document designed to benefit a beneficiary with a disability. A Special Needs Trust can form part of a Last Will and Testament, but more often it is a document that stands alone. Congress mandates that Special Needs Trusts must be irrevocable to comply with applicable laws.

When properly drafted, a Special Needs Trust may enable a person under a physical or mental disability, or an individual with a chronic or acquired illness, to hold, in Trust, an unlimited amount of assets, without those assets being considered countable assets for purposes of qualification for governmental benefits that are based upon need.

Governmental benefits based upon need may include such benefits as Supplemental Security Income (SSI), Medicaid, the expenses of vocational rehabilitation, subsidized housing, and other benefits traditionally provided to persons who are impoverished.

For purposes of a Special Needs Trust, an individual may be deemed impoverished if his or her assets are less than $2,000.00. The Special Needs Trust provides for supplemental and extra care over and above that which the government may provide, for persons under mental or physical disabilities, chronic or acquired illnesses.

Special Needs Trusts had been used for several years based upon case law. However, in 1993, Congress created an exception under the amendments to the Omnibus Budget and Reconciliation Act (OBRA-93) specifically authorizing the use of a Special Needs Trust to benefit individuals who are under the age of 65 years and who otherwise would qualify by virtue of a disability for Social Security benefits. In fact, the Social Security Operations Manual also authorizes the use of a Special Needs Trust to hold non-countable assets.

The Special Needs Trust is it's own "entity" and exists under a Federal I.D. Number (Employer Identification Number) issued by the Internal Revenue Service, and is not linked to either the Grantor's or the Beneficiary's Social Security Numbers.

Government agencies recognize special needs trusts, however they have imposed some rules and regulations upon them. This is why it is important that any family considering using a Special Needs Trust consult an experienced trust attorney — not just one who does general estate planning, but one who is very knowledgeable about Special Needs Trusts and current government benefit programs. One wrong word or phrase can make the difference between an award that really benefits the person with a disability and one that causes the person to lose access to a wide range of needed services and assistance.

The Special Needs Trust can be used for various expenditures such as:

Out-of-pocket medical and dental expenses
Eyeglasses
Annual independent check-ups
Transportation (including vehicle purchase)
Maintenance of vehicles
Insurance (including payment of premiums)
Rehabilitation
Essential dietary needs
Purchase materials for a hobby or recreation activity
Purchase a computer or electronic equipment
Pay for trips or vacations, pay for entertainment like going to a movie, a ballgame, concert, etc.
Purchase of goods and services that add pleasure and quality to life: videos, furniture, or a television
Athletic training or competitions
Personal care attendant or escort

You may have been told by someone that your disabled child cannot have a trust or they will not be eligible for any government benefits. This is true. However, the special needs trust does not belong to the person with a disability. The trust is established and administered by a trustee. The person with the disability does not have a trust. He or she is nominated as a beneficiary of the trust and the only one who receives the benefits. The trustee (trust manager) is given the absolute discretion to determine when and how much the person should receive.

Given the government's stringent requirements it is critical that the trust be carefully worded and clearly show that the trust:

is established (grantor) by the family (persons other than the person with the disability);
is managed by a trustee (and successor trustees) other than the person with the disability;
gives the trustee the absolute discretion to provide whatever assistance is required;
should never give the person with the disability more income or resources than permitted by the government;
must be used for supplementary purposes only; it should add to the things provided by the government benefit program, not supplant (replace) them;
defines what it means by supplementary/special needs in general terms, as well as in specific terms related to the unique needs of the person with the disability;
provides instructions for the person's final arrangement (families should assume that when the individual with the disability dies no relatives will be alive who know what the mother and father would have wanted);
determines who should receive the remainder (what is left over) of the trust after the individual with the disability dies;
provides choices for successor trustees — people or organizations that might be able to take a personal interest in the welfare of the person with the disability; and
Protects the trust against creditors or government agencies trying to obtain funds to pay for debts of the person or the family.

Since the trust is a legal arrangement that is regulated by the laws of your state, there will be other sections that your attorney may need to include. It is important to know that, while the majority of public assistance funds come from the federal government, which provides guidelines for Special Needs Trusts, it is the responsibility of each state government to regulate trusts and administer the federal benefits. As long as the federal guidelines are followed to the letter, the state will accept the Special Needs Trust, and the trust will fulfill its function.

The Social Security Administration's (1990) publication Understanding SSI discusses special needs trusts as follows:

How do resources in this type of trust count in the SSI program?
Money or property in this type of trust for an SSI beneficiary...does not count toward the SSI resource limits of $2,000 for an individual.
How does money from the trust affect the individual's SSI payments?
Money paid directly to the providers for items other than the person's food, clothing, and shelter does not reduce SSI payments. (Items that are not "food, clothing, or shelter" include medical care, telephone bills, education, entertainment.)
Money paid directly to the providers for food, clothing, and shelter does not reduce the individual's SSI payments — but only up to a limit. No matter how much money is spent for these items, no more than $155.66 (in 1991) is subtracted from the individual's SSI check.
Money paid directly to the individual from the trust reduces the SSI payment. (U.S. Department of Health and Human Services, 1990, p. 46)

When establishing a special needs trust, consider including the following provisions:

Authorize distributions to be made directly to providers of services, such as schools, health care professionals, institutions, etc.
Give the trustee sole and absolute discretion over payments of income and principal in order to maximize your child’s eligibility for public assistance benefits under current law.
Empower the trustee to terminate the trust if it is possible that your child may in the future become sufficiently competent to manage his or her own assets.
Include spendthrift provisions so that your child’s creditors may not seek to apply trust assets to satisfy debts of the child. This may also help to fend off claims from public assistance agencies for reimbursement of benefits paid to or for the benefit of your child.
Provide for a number of successor trustees in the event the individual or institution you have chosen is unable to serve or ceases to act as trustee. You may want to consider naming an individual and an institution as co-trustees to divide the responsibilities.
Consider the impact of the special needs trust on your other children. Unfair or unequal treatment can cause resentment among siblings. You may want to provide for your disabled child through insurance or other contractual benefits rather than by using other family assets.
Specify what happens to any remaining assets at the death of your disabled child. Possible remainder beneficiaries may be other children, grandchildren or a charity in your child’s name.

The Ideal Trustee

Having a Special Needs Trust requires a trustee to be appointed. A trustee is one who manages another’s property and may be a person or an institution such as a bank. In this case, the trustee is the manager of the trust and has general unlimited discretion to use trust proceeds provided for the needs of the individual with a disability. The trustee may be given full discretion to manage the money in the trust and to decide how the money is used for the person's benefit. The SNT should be drafted in such a way as to direct the trustee in how to use the trust¹s resources for the individual’s needs.

Trustees should have good money management/financial skills. The Special Needs Trust will likely exist for a long period of time. Trustees should be chosen with longevity in mind, and the trust itself should be drafted to adjust to changing circumstances, such as to allow trustees to be changed or removed.

After the death of the individual with a disability, the trustee oversees the final arrangements and the Special Needs Trust usually ends. However, the trustee may terminate the Special Needs Trust if laws change or the Special Needs Trust is challenged by the government.

Recommended requirements for a trustee:

Must understand public benefits

Will use discretion in the best interest of the disabled beneficiary

Can wisely invest and conform to all statutory fiduciary requirements

Understands taxes

Keeps perfect books

Carries insurance, is bonded, or has deep pockets

The ideal trustee is usually a committee of Family and Professionals. The Trustee can be directed by a Trust Advisory Committee which can direct distributions or replace the Trustee. A trust advisory committee was important to us to add a system of checks and balances to the Special Needs Trust. We felt that this would eliminate the possibility of a single trustee acting on behalf of their bank, law firm or accounting firm rather than in the interest of our daughter. We also felt that we needed to be involved in all decisions since no one can know our daughter and her needs better than us while at the same time gaining the objectivity of unbiased professionals that may know of a better way of securing Katie’s future. We specifically wanted to ensure that Katie would have a home that was completely accessible to her in a very safe area and within a locale that would provide her with the amenities that she would require throughout her life such as medical and therapy facilities, recreational opportunities, companionship, employment opportunities, public safety, transportation, religious opportunity and outside agency assistance when we are no longer here to take care of Katie. Ultimately we settled on Katie’s Trustee being a very well respected bank with a very caring and sympathetic trust manager and financial support staff.

Selection of the Ideal Trustee

Family members
Professional fiduciary
Bank
Trust company
C.P.A.
Private social worker or case manager
Or a combination of the above

All Trusts are not Created Equal

Do not trust the lawyers to get it right for you. How many times have you been told to read the fine print? Human nature is to take authority at face value and accept pre-drafted legal documents on faith rather than to struggle with the legaleeze that they are drawn up in. If you follow this path you may end up with something that is entirely wrong for you and your child. The first special needs trust that we received infuriated me to say the least. It was drawn up by a very large and well respected law firm however we felt that it was created by someone who was completely inept. In short it permitted the trustee to do whatever, whenever and however they wished with Katie’s money and be absolved of any liability forever. It carried the use of trust on in perpetuity after Katie’s death to the benefit of the trustee rather than Katie’s heirs. It was also mistakenly giving one half of Katie’s money to another trust with which we were in no way connected. In fact it was in another young mans name which probably should have been confidential information. The lesson that we learned was not to ever trust the reputation of a large law firm, question everything, and to never sign a document until you have read it at least three times and to have it read by an unbiased professional for a second opinion. After this near disaster, I requested recommendations and references on a new trust attorney. We selected the new attorney of our choice and remained very happy with his work and that of the Trustee through the completion of Katie’s special needs trust.

After nearly 4 years of involvement with the court system we thought we were finally finished. Think again. The special needs trust had to be presented to the Orphan’s Court. The arrogance of the judicial system is unbelievable. They have the attitude that this is their game and they will create and change the rules to their benefit rather than the victims as they see fit and there is nothing that you can do about it except to try to vote them out of office. It was implied that to buck the system results in retaliation on their part. Our court system is badly broken. We will now be saddled with court involvement in our lives possibly for years to come allowing attorneys to dip into Katie’s money every time a major decision has to made, rather than simply permitting the trustee to do their job. We will forever have to be wary of who is charging Katies trust for services and how much they are charging. This requires gaining specific knowledge in what the normal and customary fees are for services.

There is a lot of flexibility in the creation of a Special Needs Trust. We chose to have a single institution serve as trustee for the SNT but only after I checked references and spoke with additional professionals about their ability and services. In fact I entered into this trustee discovery vowing not to use a Bank because of past dealings with them. However through my process of comparison and discovery there were many more reasons to use a bank over other trustees than not to use them. They are able to provide both trust and investment services, have a good track record and we felt that my decision was thorough and objective. After discussions it was decided not to work as co-trustees with the bank trustee because it complicates issues when filing paperwork, taxes etc…

We did include a provision that allows us to move the trust at our discretion and since I happen to enjoy following investments as a hobby I will be keeping close tabs on how Katie’s money is being invested and it’s returns.

The establishment of the special needs trust took several weeks, and for us proved to be quite stressful. However in the end, our decisions have proven to be good ones and Katie’s Trustee has exceeded even our highest expectations.

Frequently Asked Questions about Special Needs Trusts

Unless you are involved with a special needs individual, you probably have never heard of a special needs trust, as was our case. I immediately had a lot of questions.

What is a "special needs" trust?
"Special needs" is just a term to describe any trust intended to provide benefits without causing the beneficiary to lose public benefits he or she is entitled to receive.

When Might A Special Needs Trust Be Created?

It is very common for parents to create the Special Needs Trust as a means for holding assets to benefit disabled children after the parent’s death. The Special Needs Trust is an estate planning tool of choice for those parents. Additionally, the disabled or chronically ill individual may at some time during his or her lifetime come into funds from third party sources which could include personal injury settlements, bequests from relatives or friends, Social Security or other types of insurance back payments, and the like.

When should a Special Needs Trust be set up?

Parents may consider setting up an SNT when they begin their future planning activities such as drawing up their wills. If their child with a disability will likely have long-term medical or support needs, the SNT can be a vehicle to supply the funding to provide lifetime quality care. Even if the child¹s future prognosis is unclear, it is never too early to put plans in place for contingencies such as the parents¹ sudden death or disability.

If Having Money Will Cause Problems For My Disabled Child, Can't I Just Leave That Money to His Brother and Sister and Ask That They Look After Their Sibling?

Leaving money to others can create serious problems. "Disinheritance" was commonly used before the use of Special Needs Trusts was ratified and confirmed by Congress.

Using disinheritance as a means of providing for a disabled or ill person as a way of preserving eligibility for governmental benefits puts the assets at risk. For example, a non-disabled sibling holding assets for the benefit of a disabled sibling could be subject to such liabilities such as judgments from automobile accidents, bankruptcies, divorce, etc. In such circumstances, those assets that parents wish to specifically benefit a disabled or chronically ill child, could go to pay the judgment creditors or the estranged spouse of the non-disabled sibling. Establishing a Special Needs Trust guarantees that the funds will be held only for the benefit of the person with the disability or chronic illness, and not for any other purpose.

Can Any Lawyer Create a Special Needs Trust?

A family or person that wishes to benefit an individual under a disability or chronic illness will be well advised to utilize the services of an attorney that specializes in Special Needs issues. A Special Needs Trust can very easily be "invaded" by governmental benefit sources, and the Trust can be easily invalidated if the proper language is not utilized throughout the Trust. Using a law firm that specializes in Special Needs issues assures you that the attorney is familiar with the benefits systems, the proper creation of the Trust, and ultimately the defense of the Trust in the event that it should be challenged by a court, the Social Security Administration, Medicaid or the like.

What kinds of public benefits do special needs trust beneficiaries receive?
Each special needs trust can be intended to protect different public benefits. Most commonly, special needs trusts are intended to permit Supplemental Security Income (SSI) and Medicaid recipients to receive some additional services or goods.

Does the Social Security Administration Allow Special Needs Trusts?

In 1975 the Social Security Administration established rules allowing assets to be held in trust for a recipient of Supplemental Social Security Income as long as the disabled beneficiary:

1. Cannot control the amount or the frequency of trust distributions and

2. Cannot revoke the trust and use the trust assets for his or her personal benefit.

The Social Security Administration's handbook Understanding SSI states:

"A trust can be set up for an SSI beneficiary."

Who can establish a Special Needs Trust?

Parents (or other family members) of a disabled child can establish a Special Needs Trust as part of their general estate plan. The parents can "pour-over" that child's share of their estate into this special trust and not worry that their child will be prevented from receiving benefits when they are not there to care for the child.

In our case, Katie’s Special Needs Trust will be initially funded by the award she will receive as the result of a medical malpractice lawsuit. It doesn’t matter where the money comes from except that it cannot be the disabled individual’s money to start with.

A disabled person who expects an inheritance or other large sum of money may establish a Special Needs Trust. Receipt of these funds might otherwise disqualify them from public benefits. In many situations, a trust can also be established after the disabled person has received an extraordinary amount of money, though a court order may be necessary.

What Types of Language Should Specifically be Used Within the Special Needs Trust?

At a minimum, the Trust should state that it is intended to provide "supplemental and extra care" over and above that which the government provides. It should be set forth clearly within the text of the Trust that it is not intended to be a basic support Trust. It should not contain an estate tax provision called a "Crummey Clause." A properly drafted Special Needs Trust should reference the Social Security Operations Manual and the relevant portions from within the Manual that authorize the creation of the Trust.

The Trust should also have language explaining the exception to the Omnibus Budget and Reconciliation Act (OBRA-93) provisions which authorizes the creation of the Trust, and a copy of the relevant provisions from the United States Code (USC).

Who will manage the trust assets?

The manager of a trust is called a "trustee". It can be any person over eighteen years of age, a bank, a financial planner, Certified Public Accountant, or a professional fiduciary. The trustee holds, administers, and distributes all property allocated to the trust for the benefit of the disabled person during their lifetime.

Who can serve as Trustee?

In most circumstances when a Special Needs Trust is established by parents for the benefit of a disabled child, those parents serve as the trustee until they die or become incapacitated. When that occurs a successor selected in advance by the parents or person establishing the trust continues to serve according to instructions contained in the trust.

Can the disabled person serve as trustee?

No. The whole premise of a Special Needs Trust is that the disabled beneficiary shall not be considered to have access to principal or income of the trust. The assets of the trust are for the benefit of the disabled person. However, the disabled person has no power or authority to direct the payment of funds.

What is placed in the trust to establish it?

Any kind of asset may be held by the trust. Holding title by the trust is a simple process of putting the title to that asset in the trust's name. Many times a trust has no assets put into it until the death of the grantor. The Special Needs Trust in that case is an empty shell waiting for a future event. It is prudent to place some assets into the trust and begin using the trust immediately, but it is not required.

Can Additions be made to the Trust?

Yes. Additional property may be added to the Trust at any time by the grantor, or any other person. Additions may be made by gifts during life, by will or living trust, by life insurance policies, employee plan benefits, or retirement plan benefits.

Are Special Needs Trusts Confidential?

Yes. If the grantor desires, the Trust can remain confidential to all persons.

Can a Special Needs Trust be used by recipients of settlements or personal injury awards?

Yes. The new legislation allows the court to authorize the creation of a Special Needs Trust where a minor or disabled person is to receive funds pursuant to a compromise or court judgment. The assets are not deemed available for purposes of medical or SSI eligibility. The trust protects the award for use in the future for the special needs of the disabled person. Ask your attorney and CPA how many special needs trusts they've handled in the past year, what percentage of their client base is special needs families, and how well-versed they are in government benefits eligibility.

Does the existence of a special needs trust qualify the beneficiary for public benefits?

No. The existence of a special needs trust does not itself make public benefits available; the beneficiary must qualify for the benefits program already, or qualify after the trust is established. If properly established, the special needs trust will not cause a loss of benefits (although in some circumstances the level of benefits may be reduced), but the trust does not make it easier to qualify.

What is a "supplemental benefits" trust?

Some lawyers prefer to use the term "supplemental benefits" rather than "special needs." Occasionally the term "supplemental needs" is used. All are interchangeable, and describe the purpose of the trust rather than being a limited legal term.

Who can establish a special needs trust?

Anyone can establish a special needs trust, but there are two general categories of such trusts: self-settled and third-party trusts.

What is a third-party special needs trust?

A third-party special needs trust can be established by one person for the benefit of another. The person establishing the trust, called the settlor (or grantor or, sometimes, trustor) chooses to make some of his or her own assets available for the benefit of the disabled beneficiary. Third-party special needs trusts are often established, for example, by parents for their developmentally disabled or mentally ill children.

What special rules govern third-party special needs trusts?
There are actually few rules governing third-party special needs trusts. Since the beneficiary was never entitled to the money in the trust, the most important rule is simple: the trust terms should not create any entitlement to either income or principal. If the trustee has complete discretion whether to make distributions for the beneficiary, the trust principal and income will usually not be counted as available.

What can a third-party special needs trust provide for the trust beneficiary?
The cardinal rule for special needs trusts is that the trust may not provide food, clothing or shelter, or any asset which could be converted into food, clothing or shelter (including cash), to the beneficiary. In other words, the trust can provide for physical therapy, medical treatment, education, entertainment, travel, companionship, furniture and furnishings (such as a television or computer), and some utilities (like cable television and a telephone, but not electricity, gas or water). Distributions of cash to the special needs trust's beneficiary are almost never permitted (though even this central rule may have some limited exceptions).

Can a special needs trust be used to purchase a home, or pay rent, for the beneficiary?
Yes. There are special rules affecting the use of special needs trusts (or any third-party payment) for shelter. Those rules are very difficult to navigate, and depend heavily on the beneficiary's situation; secure competent legal advice before making any decision about the provision of shelter.

Is it easy to establish a proper third-party special needs trust?
While the principles involved in third-party special needs trusts are simple, there are a myriad of choices involved in the actual drafting of a trust. In addition, the administration of a special needs trust can be extremely difficult. A seasoned lawyer, familiar with public benefits programs and special needs trust provisions, should always be involved in preparation of a third-party special needs trust. While many legal matters can be undertaken without a lawyer, or with a lawyer with general background, special needs trusts are complicated enough to require the services of a specialized practitioner.

What is a self-settled special needs trust?
Sometimes a public benefits recipient may have assets that prevent continued eligibility for benefits. In such a case, it may be possible and advisable to place assets into a special needs trust to regain or continue eligibility for government benefits.

What types of assets might an individual place in a self-settled special needs trust?
Self-settled special needs trusts are often established by individuals who have received a personal injury settlement (perhaps, but not necessarily, arising out of the incident that caused the disability) or inheritance. More rarely individuals with pre-existing wealth determine that it would be advisable to create a special needs trust.

If the special needs trust is actually established by a guardian, or a court, is it still "self-settled?"
Yes. Federal law makes it clear that a trust established with assets which would have belonged to an individual, or his or her conservatorship, is self-settled regardless of who signs the trust instrument

Why would someone with assets want to place his or her money in a special needs trust just to qualify for government benefits?
Many benefits available from the public sector are extremely expensive when paid for privately. Some are practically unavailable except through the public system.

What restrictions are placed on self-settled special needs trusts?
Self-settled special needs trusts are much more complicated than their third-party equivalents. Usually (but not always), a self-settled special needs trust must comply with a federal law first enacted in 1993. That law requires that most self-settled special needs trusts actually be established by a judge, a court-appointed guardian or the parents or grandparents of the beneficiary (Social Security regulations may limit creation of trusts to the first two categories in most circumstances). In addition most self-settled special needs trusts will have to include a provision repaying state Medicaid agencies for any benefits, payable at the death of the beneficiary. Such a provision is often called a "pay-back" provision.

Must both third-party and self-settled special needs trust include "pay-back" provisions?

No. Absent unusual circumstances, only self-settled special needs trusts require a provision repaying the state for Medicaid benefits

Is There an Obligation to Repay Medicaid or other State and Federal Funding Sources?

There may be repayment obligations in some situations.

A properly drafted Trust will address the issue concerning paybacks to Medicaid or other such sources. The amendments to the Omnibus Budget and Reconciliation Act of 1993 (OBRA-93) require that a payback be made to Medicaid, but only under certain specific circumstances. A Special Needs trust that is funded by parents or other third party sources will not be required to pay back Medicaid. The only assets within the Trust that are subject to the repayment obligation are those assets which belonged to the disabled individual him or herself which were subsequently transferred into the Trust. An example of assets which would belong to the disabled individual in the first place could be such assets as earnings from a job, Social Security back payments, personal injury recoveries, and the like. The disabled individual's estate then might be liable for an amount equal to the Medicaid used during the lifetime of the disabled or chronically ill individual. It is not uncommon for a disabled individual to ask a court to direct certain assets into the Trust before they become owned by the individual him or herself. In that event, those assets may not be subject to the repayment provision of OBRA-93.

Conclusion

A special needs trust is an important legal instrument that will allow you to provide for your special needs child throughout their adult life without disqualifying them from receiving public benefits which the may also need. These can be funded quite affordably through life insurance policies and will provide quite a sense of relief for you knowing that your child will be provided for after your death. Katie's well being after we are gone was a continual source of concern for us, her special needs trust will continue to provide for her and give her the ability to live as independently as possible.