Here are answers to a few of the commonly asked questions regarding Special Needs Trusts (SNT) in Missouri.
What is a Special Needs Trust?
A special needs trust is a trust designed for beneficiaries who are disabled, either physically or mentally. It is written so the beneficiary can enjoy the use of property that is held in the trust for his or her benefit, while at the same time allowing the beneficiary to receive essential needs-based government benefits.
Most Special Needs Trust beneficiaries are eligible or actively seek eligibility for Supplemental Security Income (SSI) and Medicaid (in Missouri, Medicaid is called Mo HealthNet) which are each needs-based programs. Needs based programs require the beneficiary have limited “available resources” (income and assets).
Without a Special Needs Trust, a gift to a disabled loved one will likely be considered an “available resource” thereby making the loved one ineligible for the government benefit until after all of the beneficiary’s available resources has been spent down to a minimal amount such as $1,000.
How does a Special Needs Trust help?
A special needs trust allows a trustee (a trusted individual or organization, someone other than the beneficiary) to control and manage the trust property on your loved one’s behalf. Because your loved one has no control over the money, SSI and Mo HealthNet administrators do not consider the trust funds as “available resources.” A parent could set aside millions of dollars in a special needs trust for a child and still have the child qualify for SSI and Mo Healthnet. In most cases, the amounts are much more modest.
Most special needs trusts are designed for Supplemental Care. This means the SNT exists to supplement available government benefits, not to replace them.
What can a Special Needs Trust pay for?
A lot. Here is a partial list of what the funds in a Special Needs Trust can be used for:
- Appropriate recreational activities, hobbies and vacations
- Educational and training opportunities
- Hire personal assistants to help the beneficiary with activities of daily livings (ADLs)
- Purchase a vehicle for the beneficiary, often a customized or handicap-accessible van
- Pay for additions or renovations to the beneficiary’s residence so that it is safe and accessible
- Professional services for the beneficiary including attorneys and accountants
- Purchase and care of a service animal for the beneficiary
2 Main Types of Special Needs Trusts
There are 2 main types of Special Needs Trusts: (1) self-settled, and (2) third-party. Third-party Special Needs Trusts are by far the more common.
A Self-Settled Special Needs Trust is funded with the beneficiary’s own assets. Federal law imposes special requirements on these trusts including that it must have a reimbursement / payback provision for Medicaid.
A Third-Party Special Needs Trust is one that is funded with assets not belonging to the beneficiary. It is common for parents to set these up for a child or grandparents for a grandchild. It does not have the reimbursement / payback requirement that a self-settled special needs trust does. The result is that all of the property remaining in a third-party special needs trust at the death of the disabled beneficiary may be distributed as the trust agreement directs.
If A Loved One is Disabled, Ask How a SNT Can Help
Helping preserve assets for the care of disabled child or grandchild is rewarding work. If you have questions about how a Special Needs Trust can benefit you or a loved one who lives in Missouri, please ask. Asking the question and learning about your options to care for a loved one can make a world of difference in the options available to them and how your funds are spent.