SPECIAL NEEDS TRUSTS

A Special Needs Trust is a trust created for a chronically and severely disabled beneficiary which supplements government benefits such as Medicaid rather than diminishing such benefits. Medicaid and other government benefit programs consider the resources and income of an individual for purposes of determining eligibility for assistance and the amount of such assistance. With a Special Needs Trust, however, a person such as a family member may establish a trust for a disabled individual without jeopardizing the beneficiary's eligibility for Medicaid and other government benefits. With recent changes in federal and state law, trusts for disabled persons may even be established with the disabled person's own funds, if certain “pay-back” rules are followed. A Special Needs Trust may now be funded with the monies obtained by the disabled person by a court or through settlement of a medical malpractice or personal injury case. These trusts are referred to herein as "pay-back" trusts because they are valid only if the state is paid back for medical assistance at the end of the trust.

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