Many times we’re asked at The Special Needs Network, “Just what is a Special Needs Trust?” The “elevator speech” answer is:
A Special Needs Trust (SNT) contains the assets of an individual who is disabled, and protects those assets from being counted as a resource for means-tested public benefits such as Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), Medicaid and Medicare. In the United States SNT’s are also known as Supplemental Needs Trusts and can have unique advantages in relation to the provision of health care, long-term care, and nursing home care benefits especially when using Medicaid.
Because The Special Needs Trust Network is a “Pooled Special Needs Trust” we also get asked what that is..Simply put a “pooled” Special Needs Trust (SNT) is a trust that “pools” all beneficiary funds together for investment and administrative purposes while maintaining an individual sub-account for each beneficiary. A self-settled pooled SNT like the one run by The Special Needs Trust Network is authorized by a specific Federal stature: 42 United States Code, Section 1396p (d) (4) (c) and therefore is often referred to as a d4c trust. This same statue says that pooled trusts could be administered by non-profits and there are now non-profit pooled trusts operating in all fifty states.
The beauty of the pooled trusts is that we don’t have to accept only large amounts of money because we pool all of the money into one master trust. Beneficiaries receive interest and capital gains earnings on their investment principal in direct proportion to the percentage of the pool the money in their sub-account represents. Many banks and investment companies won’t create trusts for anything under $1 million dollars, and even with $250,000 many times beneficiaries have a hard time finding an investment partner to create an SNT. A non-profit pooled trust like The Special Needs Trust Network will help clients of all financial ranges from five-figures on up to beyond $1 million.
Special Needs Trusts are used frequently to:
- Receive an inheritance
- Accept a personal injury settlement
- Collect Insurance settlements
- Receive Windfalls
- Collect back payments
Receiving money in any of these ways without having a proper SNT set up can cause a disabled person to lose some or all of their needed benefits. Contrary to many sensational news stories regarding large settlements we see individuals who many times receive far less than $100,000. Asset guidelines for an individual applying to qualify for Medicaid or who are on Medicaid have to meet SSI guidelines which are:
- Single applicant no more than $2,000 in countable assets
- Married applicant no more than $3,000 in countable assets
As you can see just accepting the normal back payment from SSDI, which is usually around $10,000, after waiting to qualify can cause someone to potentially lose benefits. You can see why a properly set up and administered pooled SNT can help those people who need it the most. In future blogs we’ll discuss the two types of SNT’s; first party and third party, as well as expand upon the benefits of these trusts.
If considering an SNT please talk to a qualified and certified elder care or trust attorney easily found at both The National Elder Law Foundation (NELF), and The National Academy of Elder Law Attorneys (NAELA). Please check back for further information regarding SNT’s their variations, uses, and benefits, and as always we look forward to your questions and comments.
