Keep Medicaid and SSI
The Purpose of the Special Needs Trust is to protect its beneficiary from losing government benefits such as Medicaid and SSI. A Supplemental Needs Trust, (also known as Special Needs Trust) enables the disabled or sick person to have substantial assets and still receive Medicaid and SSI. In conjunction with other Medicaid and SSI planning strategies, a Special Needs Trust is paramount to protecting assets from being counted for the purposes of Medicaid, SSI, vocational rehabilitation, subsidized housing, and other benefits based upon financial need.
Supplemental Needs Trusts are completely legitimate, being authorized by New York State and Federal Law. The Omnibus Budget Reconciliation Act passed by Congress in 1993 specifically authorized the use of Supplemental Needs Trusts for the benefit of individuals who are under the age of 65 years and disabled according to Social Security standards. The Social Security Operations Manual (POMS) authorizes Supplemental Needs Trusts for non-countable assets.
Special Needs Trust is Also a Valuable Estate Planning and Investment Tool
Many parents also use the Supplemental Needs Trust as a tool to leave assets to their child after their death. A Supplemental Needs Trust can be used to transfer benefits to a disabled person, as well as to shield the disabled person’s own assets, such as inheritance from someone else, proceeds of a lawsuit, insurance proceeds, even lottery winnings. A Supplemental Needs Trust used to protect one’s own assets is called a self-settled trust.
It is important to note that self-settled trusts have to follow specific rules to qualify its holder for government benefits. For example, a self-settled trust cannot be self-created.
Special Needs Trust Provides Protection from Creditors
Because a Special Needs Trust is not revocable, assets in such trusts are not easily reachable by future creditors, and are hard for the courts to reach if there is ever a judgment against the disabled beneficiary
Most Assets in a Supplemental Needs Trust are Not Subject to Repayment
Assets contributed to a Supplemental Needs Trust by parents or third parties are not subject to repayment to the government. The same goes for proceeds of personal injury settlements that are court-ordered into the Trust. In most cases, only assets that at some point belonged to the disabled person can be taken back by Medicaid, and even that occurs only after the death of the disabled individual.
Call the Law Offices of Albert Gurevich at (212) 233-1233 and schedule a consultation to discuss if a Special Needs Trust is right for your situation.