FIRST PARTY SPECIAL NEEDS TRUST (SNT)

WHY USE A SNT & LEGAL AUTHORITY

The main purpose of a Special Needs Trust is to preserve current and future eligibility for two government benefits: Medicaid and/or Supplement Security Income (SSI). The legal authority for a SNT can be found under 42 U.S.C. §1396p(d)(4)(C). CPT Institute offers a First-Party Pooled Special Needs Trust, which is commonly referred to as a pooled trust or a (d)(4)(c) trust. A Pooled Special Needs Trust offers the same protections as an Individual Special Needs Trust, which is commonly referred to as a (d)(4)(a) trust.

GENERAL RULES OF A SNT

In order to preserve your Supplemental Security Income (SSI) and/or Medicaid, CPT Institute must follow the three general rules below:

1. All disbursements from the SNT must be for the primary benefit of Trust Beneficiary - To protect eligibility for SSI and/or Medicaid, CPT Institute will only approve disbursements for the “primary benefit” of the trust beneficiary. See POMS SI 01120.203(B)(1)(e).
2. All disbursements from the SNT must be payable to a third party. Funds cannot be made payable directly to the Trust Beneficiary - Money directly given to the Trust Beneficiary will be considered as “unearned income”, which will reduce his/her SSI benefit on a dollar-for-dollar basis. See POMS SI 01120.200(E)(1)(a).
3. All disbursement requests from the SNT require receipts and/or invoices to process - As trustee, CPT Institute requires receipts, invoices, and/or other evidence to keep accurate records of all SNT transactions. The Social Security Administration Office (SSA) or the local Medicaid office may request copies of these records to verify that disbursements made from the SNT for the benefit of the trust beneficiary were appropriate. If unable to provide these records, it will be presumed that the disbursements were made inappropriately and the Trust Beneficiary will lose his/her eligibility for SSI and/or Medicaid.

SHOULD I USE A SNT?

A Special Needs Trust can be a tremendous benefit for an individual to preserve his/her Medicaid and/or Supplemental Security Income (SSI). For example, if an individual receives funds that places them over the $2,000 resource limit, he/she will be ineligible to receive Supplemental Security Income (SSI). However, if those funds are placed into a Special Needs Trust, he/she can maintain eligibility for SSI and use the funds from the settlement or inheritance following the general rules above. If the individual has no interest in preserving his/her Medicaid and/or Supplemental Security Income (SSI), a Special Needs Trust would not be warranted. Our Quick Reference Guide titled: When to Consider a Special Needs Trust, illustrates the high cost of waiving benefits.