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Special Needs Planning


There are over 740,000 disabled individuals living in the state of Massachusetts, comprising approximately 11% of the total state population.  Many of these disabled individuals have family members who, in addition to providing physical care and affection, want to financially provide for their disabled loved ones.  Their ability to do so is complicated, however, due to the eligibility requirements of disabled individuals for government assistance programs.

Hundreds of thousands of disabled individuals in Massachusetts receive some form of public benefits to assist with their expenses. About one-third receive Supplemental Security Incomes, or SSI, which provides monthly income to pay for shelter and food.  Over half of all disabled individuals receive health insurance through a government assistance plan such as Medicare or Medicaid, also called MassHealth.

These programs provide vital support for individuals with disabilities but all programs have strict financial limitations.  Gifting monies to an aid-eligible disabled family member can actually disqualify them for these essential benefits.  Further, personal injury settlements and the like can limit eligibility.  Fortunately, there is a solution that can allow caring family members to provide for their disabled loves ones without negative consequences on receipt of public benefits and enable disabled individuals to protect their own assets.  The answer is establishment of a Special Needs Trust, also known as a Supplemental Needs Trust.

Creating a Special Needs Trust

A Special Needs Trust can be established on behalf of an individual who is physically or mentally incapacitated according to the Social Security Administration’s definition of a disability.  This type of trust is most commonly created for adult children with mental or physical disabilities so that they may preserve their MassHealth and SSI or SSDI eligibility.  It can also be created to assist with older disabled individuals.

The trust is set up so that the trustee can distribute assets in the special needs trust to the beneficiary at his or her discretion.  Parents creating the trust for an adult child may designate themselves as trustees as well as successors.  In order to not impact governmental benefits programs, a special needs trust cannot pay for basic needs covered by government assistance.  Therefore, the trust cannot pay for shelter, some medical care, and food.

A special needs trust can pay for any sort of supplemental needs, which can include:

  • Vacations
  • Summer Camps
  • Clothing
  • Transportation
  • Computers
  • Furniture
  • Attorney’s fees
  • Restaurant meals
  • Activities
  • Medical treatments not covered by government programs

Funding the Special Needs Trust

There are two separate ways to fund a special needs trust.  First, the beneficiary, or the disabled individual, can actually place his or her own assets into a special needs trust, also known as a First-Party Special Needs Trust.  This type of trust will allow disabled individuals to qualify for government programs without having to spend all of their assets.  A First-Party Special Needs Trust must include a payback provision, which requires the trust repay MassHealth for any benefits received upon the death of the beneficiary.  However, this payback provision only extends to the value of the trust on the day of the beneficiary’s death, so utilizing all of the assets during the beneficiary’s lifetime can avoid the payback.

Secondly, the Special Needs Trust can be funded by a third party, either through inheritance or a gift.  This is referred to as the Third-Party Supplemental Needs Trust.  The trust functions in the same manner as the First-Party Special Needs Trust, but is not required to have a payback provision.

The florida Trust Attorneys at BK Estate Planning Can Help

BK Estate Planning Attorneys can create a Special Needs Trust to care for your disabled love one in an effective manner.  With over 20 years of legal experience, including trust creation, attorney we will provide you with exemplary legal services.  You can reach BK Estate Planning Attorneys at (954)866-1111.