Trustee Considerations
When a beneficiary wishes to purchase home from his/her settlement proceeds that are placed into a First Party Special Needs Trust with CPT, CPT, as Trustee must consider the following:

  • The amount of funds available for the purchase of the home.
  • Projected future costs of the home such as upkeep and maintenance.
  • The life expectancy of the beneficiary.

A thorough analysis of the budget and additional factors must be considered before a home purchase is approved. Why? As a Trustee, CPT has the responsibility to administer the trust in such a manner that preserves and maximizes the beneficiary’s eligibility for public benefits. If not, CPT, as Trustee will be in breach of its fiduciary duty.

Ownership & Titling
A home purchased with a beneficiary’s funds is owned by the beneficiary, not CPT. However, in some states titling the home in the name of the beneficiary may not be allowed, and in other states it is an allowable option, but the state Medicaid office may need to be provided notice of such purchase. A home purchase request is to be analyzed specifically for the variance by state.
If the beneficiary is either conserved or has a guardian appointment by the court, court approval/court order is needed to make any purchase requests.

What if the beneficiary is a minor?
If the beneficiary is a minor the parent(s) have the duty and responsibility to provide the necessities of life which include food, clothing, and shelter. If the trust beneficiary is a minor, this would be taken into consideration.

Maintaining Eligibility of Public Benefits
For an individual receiving both Medicaid and Supplemental Security Income (SSI), if a home purchase is or will be the sole primary residence of the beneficiary it is considered an exempt asset for determining eligibility.

For Supplemental Security Income (SSI) recipients, according to the Social Security Administration (SSA), a home, regardless of value, is an excluded resource as long as it is the primary residence of the individual (POMS SI 01130.100). When the beneficiary’s Special Needs Trust purchases the home outright and he or she resides in the home during the month of purchase, the purchase is considered in-kind support and maintenance for the beneficiary only during that month. In addition if the trust purchases a home with a mortgage, the month of purchase and every subsequent month after in which a mortgage payment is made from the beneficiary’s Special Needs trust, the mortgage payments are considered in-kind support and maintenance. This would cause a reduction of benefit payments of no more than Presumed Maximum Value (PMV) (POMS SI 01130.100) (POMS SI 00835.300).

In regard to Medicaid eligibility a home is an excluded resource. However, in some states there is a specific value exclusion. Different states have different rules regarding home purchases and selling as well. Selling a home and receiving the proceeds from the sale may interfere with continued eligibility for Medicaid. For beneficiaries over the age of 55, depending on the state in which he or she resides the property may still be subject to state recovery, and state law determines which assets are subject to such recovery (42 U.S.C. § 1396p(b)(4)).

Selling the Home
If a Beneficiary wishes to sell a home and has proceeds from selling the home that are not in turn invested in another residence, the funds receiving from selling the home could likely disqualify him or her from public benefits such as Supplemental Security Income (SSI) and Medicaid unless the funds are placed into the Special Needs Trust. In addition, there is a time frame associated to purchase another home with the proceeds from selling the home. It is also the beneficiary’s responsibility to inform proper state agencies such as his or her local Medicaid office and the Social Security Administration (SSA) to report the proceeds from selling the home. Before actually selling the home, it is important to speak with a Special Needs Planning Attorney in your area for guidance as well as working with your local Medicaid and Social Security Office Representative beforehand because every state has different rules/regulations.

DISCLAIMER: The information provided by CPT is for informational purposes only and is intended to be used as a non-legal guide prior to consultation with an attorney familiar with your specific legal situation. CPT is not engaged in the practice of law or in rendering legal advice or counsel. No such legal advice or counseling is either expressly or impliedly intended. This form is not a substitute for the advice or counsel of an attorney. If you require legal advice, you should seek the services of an attorney. © 2017 CPT All rights reserved.

Resources and Further Reading:
Urbatsch, K., & Fuller, M. (2016). Administering the California special needs trust: A guide for trustees and those who advise them (2nd ed.). Bloomington, IN: IUniverse.