Frequently Asked Questions for Special Needs Trusts:

 

 Do I need a Trust?

A Special Needs Trust is usually necessary only if the person is receiving Medicaid, SSI or other means-tested government benefits. Small settlements may not warrant the establishment and administration of a trust. Other ways can be found to shelter the settlement funds. Even if the person is not currently receiving benefits, a trust must be considered if there is a possibility that the person may receive means-tested government benefits in the future.

 

Who should be in charge of the Trust?

A professional trustee is often the best arrangement. The professional trustee must be sensitive to the needs of the beneficiary and must be knowledgeable about government benefits.

 

When is a Payback Trust required?

A Payback Trust is required only if the funds being used to establish the trust are those of the trust beneficiary.  Cases involving personal injury settlements or inheritances fall under this category.  If a parent's funds are used to establish a trust for a child, a payback provision is not required.

 

Can a Special Needs Trust buy a house?

Yes.  A Special Needs Trust can buy a house and there are often good reasons to do so. However, there are some strict rules under SSI law and under Medicaid regulations that must be considered before making that decision.  If the trust is going to buy a house, an experienced attorney familiar with government benefits should be consulted.

 

Can a Special Needs Trust buy an automobile or van?

Yes.  A Special Needs Trust can buy an automobile or a van but insurance is often difficult to arrange.  It is usually better for the trust to lease the motor vehicle.

 

Can a Special Needs Trust pay for vacations?

Yes. A Special Needs Trust can pay for vacations.

 

Can a Special Needs Trust distribute cash to the beneficiary?

Any cash distributed to a beneficiary by a Special Needs Trust will reduce the SSI payment dollar for dollar.  If the SSI payment is completely eliminated, Medicaid will be lost.  It is not good practice for a trustee of a Special Needs Trust to distribute cash.

 

How are d(4)a Trust get taxed?

There are income, gift, and estate tax considerations in establishing and administering a Special Needs Trust.