Supplemental Needs Trust

We all want what’s best for our loved ones who are physically or mentally disabled. However, providing them a lump sum of money via an inheritance can jeopardize their ability to qualify for government-funded programs such as Medicaid, which are based on the amount of income an individual makes. One potential solution is creating a supplemental needs trust.

What is a Supplemental Needs Trust?

A supplemental needs trust or a special needs trust allows an individual to set aside funds that can be used on behalf of a physically or mentally disabled person. By putting money into a trust instead of giving the money directly to an individual, the individual remains eligible for Medicaid benefits. Supplemental needs trust require a trustee who will administer the funds within the trust as needed. These funds can be used for physical rehabilitation, out of pocket medical and dental expenses, vehicles, and recreation, among other items. If the funds are depleted or the beneficiary dies, the trust ends.

Types of supplemental needs trusts include:

  • First Party Special Needs Trust: This trust can be established by a parent, grandparent, or guardian of the beneficiary. The court can set this up as well. In first-party special trusts, the beneficiary must be younger than 65. Also, the beneficiary’s assets must be used to fund the trust.
  • Third Party Special Needs Trust: This trust is set up by family members or friends. The funds can be used for needs that go beyond what’s covered by programs such as SSI and Medicaid. A beneficiary’s funds is not used for this type of trust.
  • Pooled Trust: A pooled trust is managed by a non-profit organization. Beneficiaries establish co-accounts for their expenses.

Why Attorneys Need to Know About Supplemental Needs Trusts

Supplemental needs trusts are particularly important when a beneficiary’s income is enhanced due to a settlement from a lawsuit or a divorce. These funds may disqualify an individual from receiving Medicaid benefits. To protect yourself from potential liability, it’s critical to notify clients of this circumstance and how a supplemental needs trust can help.

Synergy Settlement Services helps lawyers focus on their core work by helping solve issues involving public benefit preservation, lien resolution, and Medicare compliance, among many other services. Our multifaceted approach to resolving complex settlement issues make us an invaluable partner for attorneys and their clients.

For more information or to schedule a consultation, please submit our contact request form or call (877) 242-0022.

Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.

TESTIMONIALS

When we face difficult post resolution issues, we turn to Synergy. They provide us with the necessary expert advice about Medicare compliance, preservation of public benefits, lien resolution and settlement planning. We don’t need to go anywhere else, they are the experts when it comes to the case after the case. All of those sticky issues, they easily navigate and let us focus on other issues.

Andrew Knopf
Knopf Bigger

"I just wanted to say thanks to you and the entire Synergy Settlement Services team for helping us put together a series of structured settlements and special needs trusts in two complex cases involving significant recoveries. As always, your accessibility, guidance and expertise on a whole host of post-settlement issues is very much appreciated and valued, particularly with respect to the often confusing topic of Medicare set asides. I look forward to our continued collaboration on cases in the future and am very appreciate of the first rate service your company continues to provide to our clients."

Stephan Le Clainche
Formerly of Babbitt, Johnson, Osborne & Le Clainche

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