Special Needs Trusts
What is a First Party Special Needs Trust?
You typically use a First Party Special Needs Trust to deal with personal injury settlements, unexpected inheritance, an inheritance received by a disabled person where there was inadequate planning, and with alimony and child support.
A First Party Special Needs Trust is funded with the disabled person’s own money. This trust is also sometimes called a d4A trust, which is a reference to the section of the federal law which allows for this type of trust. One of the requirements of a trust is that it be irrevocable, meaning it cannot be changed or revoked by the beneficiary once it is created.
There is also a requirement that the trust be created and funding occurs prior to age 65. The disabled person must by definition, be disabled, by the Social Security Administration’s guidelines. Only the disabled beneficiary, the parent of the person, the grandparent, the legal guardian, or the court can create a First Party Special Needs Trust.
The trust must be for the primary benefit of the disabled beneficiary. Additionally, with a First Party Special Needs Trust, there must be a Medicaid Payback provision which states that Medicaid gets paid first when the disabled person dies or the trust terminates.
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2216 S. Miami Blvd., Suite 101
Durham, North Carolina 27703