[Special Needs, Special Planning.
One of my nieces has autism, so I am particularly sensitive to the desire of families with children with special needs to ensure that their estate plan does not render their children ineligible for governmental and charitable assistance for their expenses, medical care, therapy, housing and related items, through the use of a Special Needs Trust.
If you want to leave money or property to a loved one with a disability, but don’t want to jeopardize eligibility for Supplemental Security Income (SSI) and Medicaid benefits, you need to set up a “special needs trust” in your Will or revocable living trust. Leaving money outside such a trust could have disastrous results. While owning a house, a car, furnishings, and normal personal effects does not affect eligibility for SSI or Medicaid, even a well-meaning inheritance can often disqualify the recipient from receiving public benefits.
Some people may “disinherit” a special needs loved one to avoid this disqualification. Other’s may choose to leave the special needs child’s share to another child with the instructions that the child will look after their special needs sibling. There are better ways to ensure that your special needs child or loved one remains eligible for public benefits, while still providing funds to supplement their standard of living.
How a Special Needs Trust Can Help.
One way around losing eligibility for SSI or Medicaid is to create what’s called a special needs or supplemental needs trust (“SNT”). Instead of leaving property directly to your loved one, you leave it to the special needs trust.
You also choose someone to serve as trustee of the SNT. They who will have complete discretion over the trust property and will be in charge of spending money on your loved one’s behalf. Because your loved one has no control over the money, the money or other assets in the trust will not be considered as their assets for program eligibility purposes.
The SNT will terminate when it is no longer needed – usually, at the beneficiary’s death or when the trust funds have all been spent. You can specify who gets the remaining funds, if any, in the trust when it ends.
What can money in the Trust be used for?
Although the trustee can’t give money directly to your loved one, they can spend trust assets to buy a wide variety of goods and services for your loved one. Special needs trust funds are commonly used to pay for personal care attendants, vacations, home furnishings, out-of-pocket medical and dental expenses, education, recreation, vehicles, and physical rehabilitation.
What is a Pooled Trust?
If you can’t come up with a good candidate to serve as a trustee or are leaving a modest sum and don’t want to set up a separate special needs trust, consider a “pooled trust.” These are special needs trusts run by nonprofit organizations that pool and invest funds from many families. Each trust beneficiary has a separate account, and the trustee chosen by the nonprofit spends money on behalf of each beneficiary.
Connecticut has one approved provider of a Pooled Trust called Plan of Connecticut (“PLAN”).
PLAN trusts require no minimum funding. All PLAN trust documents are written in accordance with federal law. We are a participating attorney with PLAN.
Types of Trusts offered by PLAN
Plan of Connecticut offers three different types of trusts to deal with a variety of different situations:
- Established by anyone (usually parents)
- Can be funded at any time
- Other family and friends may also contribute to it
- Protected from creditors and lien holders
- Grantor may choose the remainder beneficiaries
- Can hold an insurance policy
- May be revocable or irrevocable
- Established by parent, grandparent, or through court order
- Funded by a person with special needs under the age of 65 with their own assets
- If there is money in the trust after the death of the beneficiary, the state Medicaid agency must be repaid for benefits the beneficiary received. This is commonly referred to as the “payback provision”
Pooled Trust (d-4-c):
- PLAN provides the only locally managed Pooled Trust in Connecticut
- Established by the beneficiary, parent, grandparent or through a court order
- By Federal statute must be run by a non-profit organization
- May be used by special needs individuals over age 65
- Can be used to qualify for Medicaid Home Care Assistance (HCA) Waiver and Personal Care Assistance (PCA) Waiver
- Beneficiary may contribute monthly excess income or one lump sum to qualify for entitlements
For more information about Plan of Connecticut, click here.
For a comprehensive list of links and resources for Special Needs, click here.