A Special Needs Trust (sometimes called an Amenities Needs Trust) is a specialized legal document designed to benefit an individual who has a disability by allowing them to preserve an unlimited amount of assets and maintain governmental benefits. A Special Needs Trust is most often a “stand alone” document, but it can form part of a Last Will and Testament or a Revocable Living Trust.
For disabled persons under 65 who need Medicaid, a special needs trust can be an effective way to maintain Medicaid eligibility and preserve an inheritance or law suit settlement to enhance the disabled patient's standard of living. One primary goal of the Special Needs Trust is to provide for quality of life and quality of care supplements without jeopardizing their eligibility . Certain trusts must have a pay-back provision that reimburses Medicaid if there is any money in the trust when the disabled person dies others do not and those trusts can be an effective way to pass inheritances to disabled family members without disqualifying them from Medicaid or requiring Medicaid spend down of the inherited funds. In a properly-drafted Special Needs Trust, those assets are not considered countable assets for purposes of qualification for certain governmental benefits. Such benefits may include Supplemental Security Income (SSI), Medicaid, vocational rehabilitation, subsidized housing, and other benefits based upon need. For purposes of a Special Needs Trust, an individual is considered impoverished if his or her personal assets are less than $2,000.00.
Using a Special Needs Trust can help you give the loved one the best of both worlds — keeping them fully qualified for government assistance while also helping them with the extras in life. There are three main types of special needs trusts a person can use to protect assets:
- The First-Party Special Needs Trust (known as a “(d)(4)(A) trust” based on its designation under federal law) is a common trust used to protect lawsuit or insurance proceeds or inheritances for someone who is disabled and needs or may need long-term care. This trust must include a Medicaid payback provision at the death of the disabled beneficiary.
- The Pooled Trust (authorized under (d)(4)©) also works similar to a (d)(4)(A) trust in that it is set up for individuals who are under 65 and disabled. The same types of assets can be protected in them, but the pooled trust is established by a charity which runs and administers the trust for a number of disabled beneficiaries. Some portion of the reminder is paid back to Medicaid when the disabled beneficiary dies and the rest is retained by the charity.
- The Third-Party Special Needs Trust (often referred to as an “Amenities Trust”) is often established by parent or grandparent to leave assets in trust for the benefit of a disabled child or grandchild. The money or assets can stay in trust and does not qualify towards what has to be spent down to achieve Medicaid or SSI eligibility. The trust funds can be used to cover those things not covered by government assistance — referred to as amenities, see list below. Because it is set up by a third-party, the remainder in the trust fund can pass through to other heirs or beneficiaries at the death of the disabled beneficiary.
A Special Needs Trust provides for supplemental and extra care over and above that which the government provides. Here is a list of examples of what a Trustee can spend the trust money on:
- acupuncture/acupressure
- attorney fees/advocacy
- appliances (TV, VCR, stereo, microwave, stove, refrigerator, washer/dryer)
- bottled water
- bus pass/public transportation fees
- clothing
- clubs and club dues (record clubs, book clubs, health clubs, service clubs)
- computer (hardware, software, programs, Internet service)
- courses or classes (academic or recreational)
- curtains, blinds, drapes
- dry cleaning and laundry services
- elective surgery
- fitness equipment
- furniture, home furnishings
- gasoline for automobile
- haircuts/salon services
- house cleaning/maid services
- insurance (automobile and/or possessions)
- linens and towels
- massage
- musical instruments (including lessons)
- non-food grocery items (laundry soap, bleach, fabric softener, deodorant, dish soap, hand and body soap, personal hygiene
- products, paper towels, napkins,
- Kleenex, toilet paper, any household cleaning products)
- over-the-counter medications (including vitamins or herbs)
- personal assistance
- pet, pet supplies
- physician specialists
- private counseling
- repair services (appliance, automobile, bicycle, household)
- retail store charge accounts (gift stores, craft stores, hardware stores, pet stores)
- sporting goods/equipment
- taxi cab scrip
- telephone, internet, cable or satellite television
- tickets to concerts or events (for beneficiary and accompanying companion)
- transportation (automobile, motorcycle, bicycle, moped)
- vacation (including paying for a companion to accompany the beneficiary)
