fbpx

Special Needs Trusts

Special Needs Trusts are trusts designed for the benefit of disabled individuals. Often, a disabled person received or may in the future receive government benefits, such as Supplemental Security Income (SSI) or Medicaid.
Need Help?

What are the benefits of a Special Needs Trust?

Special Needs Trusts are trusts designed for the benefit of disabled individuals. Often, a disabled person received or may in the future receive government benefits, such as Supplemental Security Income (SSI) or Medicaid. A lot of public benefits available for disabled people are means-tested, which means that a person has to have nearly no assets in order to qualify for the public benefits program. If a person with disabilities comes into money, whether by inheritance, settlement for the injury that caused their disability, or from some other source, there is often great concern about the person losing much needed public benefits, such as transportation services, health care coverage, and residential living benefits.

When done correctly, a Special Needs Trust can be used to get the best of both worlds. Assets contained in a Special Needs Trust are exempt from being counted when it comes to determining eligibility for Medicaid, SSI, and other government programs. A Special Needs Trust can be funded with the disabled person’s own money or with another person’s money.

The essential purpose of a Special Needs Trust is to improve the quality of an individual’s life without disqualifying him or her from eligibility to receive public benefits. Public benefits received by a disabled person are generally meant for certain purposes, so distributions made from a Special Needs Trust for the benefit of a disabled person are generally made for items that are not covered by public assistance so as to keep the person eligible for such benefits and prevent the distribution from counting against them.

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.

  • The submission of this form does not establish an attorney-client relationship. An attorney-client relationship may only be created by an express representation agreement.
  • This field is for validation purposes and should be left unchanged.

What is a Third Party Special Needs Trust?

You typically use a Third Party Special Needs Trust in the process of estate planning. Parents of a disabled child, for example, may make a Trust or provision in their Will for a Third Party Special Needs Trust to be funded for the benefit of the disabled child to ensure that they do not lose much needed public benefits but permit them to enjoy the inheritance they may receive.

You may hear a Third Party Special Needs Trust also referred to as a Supplemental Needs Trust in an effort to distinguish this type of trust from its cousin, the First Party Special Needs Trust. Supplemental Needs Trusts are funded with the money of someone other than the disabled beneficiary. Such a trust must be crafted to prevent the disabled beneficiary from exercising control over the trust property. The benefit to crafting a Supplemental Needs Trust for a disabled beneficiary is that there is no requirement for a Medicaid Payback provision, meaning that upon termination of the trust or upon the death of the beneficiary, you can proactively decide who receives what was not used by the beneficiary. The beneficiary can have no right to revoke or terminate the trust, and no right to access or control the principal. Very careful wording must be used in a Supplemental Needs Trust to prevent the entirety of the trust property from being countable, and like a First Party Special Needs Trust, use of the funds in the trust for items meant to be paid for by public assistance may cause a reduction in government benefits.

How do our Attorneys Help with Special Needs Planning?

At Hopler, Wilms & Hanna, PLLC, a significant portion of our practice is devoted to assisting those with disabilities in matters affecting management of their assets. For example:

Parents of a disabled person with disabilities can meet with an attorney one-on-one to formulate a strategy for planning for the disabled person’s needs when the parents are no longer around.

A disabled person or their representative can retain us to help divert the person’s inheritance to a Special Needs Trust to prevent them from losing public assistance as well as handle all related court filings and hearings related to such a strategy.

Trustees can come to us for help with handling their responsibilities as Trustee and handling disputes that arise in the management of a trust.

Financial planners can rely on us to be part of a team to help plan and protect a disabled person’s wealth. Our exceptional responsiveness and flexibility in working with financial advisors distinguishes us from other law firms.

Personal injury attorneys can hire our firm to prepare Special Needs Trusts to receive assets on behalf of a disabled person receiving a settlement and to educate the Court on the subject in seeking approval of the chosen strategy.

Get the Help with Special Needs Trusts?

At Hopler, Wilms & Hanna, PLLC, a significant portion of our practice is devoted to assisting those with disabilities in matters affecting management of their assets.
Click Here

As North Carolina Attorneys, we serve people and businesses all over the State of North Carolina with assistance on a variety of legal issues.

Durham

(919) 244-2019

2216 S. Miami Blvd., Suite 101 Durham, North Carolina 27703

Sanford

(919) 292-1274

1680 S Horner Blvd. Suite A Sanford, North Carolina 27330

Raleigh

(984) 205-0500

8801 Fast Park Drive, Suite 301 Raleigh, NC 27617

Durham

(919) 244-2019

2216 S. Miami Blvd., Suite 101
Durham, North Carolina 27703

Sanford

(919) 292-1274

1680 S Horner Blvd. Suite A

Sanford, North Carolina 27330

Raleigh

(984) 205-0500

Hopler Wilms & Hanna PLLC
8801 Fast Park Drive, Suite 301

Raleigh, NC 27617

We Are Grateful for The Recognition of Our Service to You

Christopher C. Wilms
Rated by Super Lawyersloading ...
Christopher C. Wilms
Rated by Super Lawyersloading ...
Christopher C. Wilms
Rated by Super Lawyersloading ...
Christopher C. Wilms
Rated by Super Lawyersloading ...
Christopher C Wilms Jr.Reviewsout of 6 reviews
Share This