Types of Special Needs Trusts
1st Party Special Needs Trust
- Settlor / Maker - Person with a disability, his or her parent,grandparent, legal guardian or a court
- Primary Beneficiary – Person with a disability
- Trustee / Owner – Any individual or professional but not the person with a disability
- Source of Funding – Person with a disability’s assets
- Amount Trust / Account is allowed to hold – Unlimited, but no additional funding after age 65
- Use of Funds – Must be for “sole benefit” of person with a disability and certain disbursements may reduce or eliminate SSI or Medicaid eligibility
- Effect of Paying for Food or Shelter – Implementation of SSI In-Kind Support and Maintenance Penalty
- Receiver of assets from trust/account on death of a person with a disability – Medicaid FIRST, then can go to heirs or whomever
3rd Party Supplemental Needs Trust
- Settlor / Maker – Person or entity except the person with the disability
- Primary Beneficiary – Person with a disability, but can be others
- Trustee / Owner – Any individual or professional but not the person with a disability
- Source of Funding – Assets of anyone but the person with a disability
- Amount of Trust / Account is allowed to hold - Unlimited
- Use of Funds – No Limitation, except for certain disbursements may reduce or eliminate SSI or Medicaid eligibility
- Effect of Paying for Food or Shelter - Implementation of SSI In-Kind Support and Maintenance Penalty
- Receiver of assets from trust/account on death of a person with a disability – Heirs or whomever is named in document
Pooled Trust
- Purpose of Establishment – Enhances quality of life of person with a disability by paying for goods and services without the loss of SSI or Medicaid
- Settlor / Maker – Person with a disability, plus their parent, grandparent, legal guardian or the court
- Trustee – A non-profit agency but may outsource trusteeship to a professional
- Amount Trust / Account is allowed to hold – Unlimited, but may incur penalty if funded after age 65
- Effect of Paying for Food or Shelter – Implementation of SSI In-Kind Support and Maintenance penalty
ABLE Accounts
Understanding the ‘Achieving a Better Life Experience’ (ABLE) Act
- Purpose of Establishment – Allows individuals with disabilities to have a cash account to pay for certain expenses without loss of SSI or Medicaid
- Settlor / Maker – Person with a disability or their agents, guardians, and maybe others
- Trustee – Any individual, including person with a disability
- Amount Trust / Account is allowed to fund and hold – Limited to annual gift tax exemption (currently $19,000 per year) plus may include some earnings Can hold up to $100,000 for SSI recipients
- Effect of Paying for Food or Shelter – No ISM penalty assess for payment of food or shelter
- Receiver of assets from trust/account on death of person with a disability – Medicaid first??? Under what circumstances? State Specific?
- See State Comparison
ABLE - Qualified Expenses
Expenses that relate to the blindness or disability of the designated beneficiary in maintaining or improving his or her health, independence, or quality of life.
- Education – to include Tuition for preschool to post-secondary schools
- Housing
- Transportation
- Employment Training and Support
- Assistive Technology and Related Services
- Personal Support Services
- Health, Prevention, and Wellness
- Financial Management and Administrative Services
- Legal Fees
- Expenses for Oversight and Monitoring
- Funeral and Burial Expenses
- Other expenses which may be identified by the Internal Revenue Service