Third-Party Special Needs Trusts are established using assets from someone other than the individual living with disabilities. Typically established by a loved one while living or through specific language in a living will specifically designating funds to be placed into a Third-Party Trust. It preserves eligibility for Medicaid and/or SSI.
The biggest advantage is that funds within this product are not subjected to Medicaid’s first right to recovery and can pass on to remainder beneficiaries.
LANGUAGE FOR LIVING WILL
“Funds for [client name] are to be placed into a Third-Party Special Needs Trust FBO [client name] with CPT Institute to preserve his/her ongoing eligibility for means-tested government benefits.”
GENERAL RULES OF A SPECIAL NEEDS TRUST
In order to preserve your Supplemental Security Income (SSI) and/or Medicaid, CPT Institute must follow the three general rules below:
- All disbursements from the Special Needs Trust must be for the primary benefit of Trust Beneficiary - To preserve 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).
- All disbursements from the Special Needs Trust 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).
- All disbursement requests from the Special Needs Trust require receipts and/or invoices to process - As trustee, CPT Institute requires receipts, invoices, and/or other evidence to keep accurate records of all Special Needs Trust 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 Special Needs Trust 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 SPECIAL NEEDS TRUST?
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.
NO Annual Fee until funding has been received
$600 Annual Fee
1% True Link Financial Money Management Fee