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Special needs Trust A special 
needs trust, also known in some 

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jurisdictions as a supplemental 
Needs Trust, is a specialized 

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trust that allows the disabled 
beneficiary to enjoy the use of 

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property that is held in the 
trust for his or her benefit, 

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while at the same time allowing 
the beneficiary to receive 

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essential needs based government
benefits. 

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A special needs trust is a 
specific type of irrevocable 

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trust that exists under common 
law. 

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Several common law nations have 
established specific statutes 

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relative to the creation and use
of special needs trusts, and 

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where they exist, A special 
needs trust will not be valid 

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unless it comports with the 
requirements listed in the 

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statute. 
The applicable federal statute 

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in the United States is founded 
Title 42, United States Code. 

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Several states have established 
their own statutes. 

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Generally, irrevocable trust can
be used for minors, 

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beneficiaries with physical or 
mental challenges and as a 

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method of asset protection. 
In addition to the public 

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benefits preservation reasons 
for such a trust. 

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There are administrative 
advantages of using a trust to 

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hold and manage property 
intended for the benefit of the 

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beneficiary, especially if the 
beneficiary lacks the legal 

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capacity to handle his or her 
own financial affairs. 

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Special needs trust may also be 
useful for people who are 

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planning for possible future 
disability throughout the world.

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A trust for a beneficiary with 
disability may be set up in any 

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of the common law countries, 
including the United States, and

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also in other countries that 
recognize the concept of a 

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trust. 
In such jurisdictions, there is 

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often legislation that provides 
advantages to such trust in the 

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areas of taxation and state 
benefits. 

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For example, in Ireland and the 
United Kingdom. 

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In the United States of America,
such trust provide advantages in

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helping beneficiaries qualify 
for healthcare coverage under 

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state Medicaid programs and also
for monthly cash payments under 

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the Supplemental Security Income
SSI program operated by the 

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Social Security Administration. 
Overview Special Needs trust can

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provide benefits to and protect 
the assets of minors in the 

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physically challenged or the 
mentally challenged. 

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Special needs trusts are 
frequently used to receive an 

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inheritance or personal injury 
settlement proceeds on behalf of

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a minor or a person with 
disability, or are founded from 

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the proceeds of compensation for
criminal injuries, litigation, 

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or insurance settlements. 
A common feature of trusts in 

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all common law jurisdictions is 
that they may be run either by 

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family members, a private trust,
or by trustees appointed by the 

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court. 
Especially where a trust is to 

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be established for a child or 
young person with disability, 

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great care is generally taken in
the choice of appropriate 

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trustees to manage the trust 
assets and to deal with future 

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replacement appointments. 
The use of a private 

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discretionary trust can not only
be more efficient in terms of 

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taxation, access to government 
benefits, but can also allow for

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more efficient investment of the
funds held and where funds are 

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held by a court official, such 
as the official receiver in 

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England and Wales. 
However, where no appropriate 

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trustees can be found, for 
example on the death of existing

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trustees, the court will 
intervene. 

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Special Needs trusts are often 
set up under the guidance of a 

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structured settlement planner in
cooperation with a qualified 

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legal and financial team to 
ensure the trust is set up 

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correctly. 
Only authorized nonprofit 

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organizations are approved to 
manage a special needs trust 

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program. 
Such pool trusts are available 

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throughout the United States and
are often centered on certain 

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purposes, often disabilities 
references. 

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Supplemental Needs Trust is a US
specific term for a type of 

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special needs trust and 
internationally recognized term.

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Supplemental Needs Trusts are 
compliant with provisions of US 

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state and federal law and are 
designed to provide benefits to 

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and protect the assets of 
individuals with physical, 

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psychiatric, or intellectual 
disabilities and still allow 

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such persons to be qualified for
and receive governmental health 

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care benefits, especially long 
term nursing care benefits. 

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Under the Medicaid welfare 
program. 

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Supplemental Needs trusts are 
often used to receive an 

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inheritance or personal injury 
litigation proceeds on behalf of

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an individual with a disability 
in order to allow the person to 

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qualify for Medicaid benefits 
despite the receipt of the 

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settlement Medicaid law. 
Medicaid is the federal program 

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administered by the states, 
which provides healthcare for 

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those who cannot afford it based
primarily on a standard of 

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impoverishment. 
The federal law establishes 

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certain mandatory requirements, 
which each state must adopt in 

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its local Medicaid program. 
States are also given options to

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elect certain other components 
of the Medicaid program, which 

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they then provide to qualified 
individuals. 

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Accordingly, Medicaid coverage 
does vary from state to state in

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certain aspects, but there are 
also mandatory federal law 

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provisions. 
To qualify for Medicaid and its 

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longterm medical and nursing 
care benefits, the applicant 

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must be impoverished. 
There is a strict limit to the 

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countable assets which a 
Medicaid recipient can own. 

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To qualify for Medicaid, an 
applicant must meet the Asset 

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Guidelines for Supplemental 
Security Income, SSI. 

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SSI allows a single applicant to
own no more than $2000 in 

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countable assets and a married 
applicant to own no more than 

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$3000 in countable assets. 
Certain assets, such as the home

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in which one is living, are 
specifically exempted and are 

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not countable trust, says 
Medicaid Countable Assets. 

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A trust is a legal arrangement 
in which legal title to assets 

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is held by a trustee under 
certain defined restrictions 

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written within the governing 
instrument. 

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Usually a will or written trust 
agreement for the benefit of 

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another party, known as the 
beneficiary trusts, can be used 

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as a vehicle to make assets 
available to a beneficiary but 

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still significantly restrict 
them. 

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Such trusts are called 
spendthrift trusts. 

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A beneficiary does not 
necessarily have to be disabled 

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to benefit from a spendthrift 
trust, but most spendthrift 

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trusts would not suffice to 
qualify their beneficiary for 

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Medicaid, as the assets held 
within them would be countable. 

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Federal Medicaid law imposes 
significant requirements on the 

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type of spendthrift trust which 
can be used to preserve assets 

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of a beneficiary and still 
qualify the beneficiary for 

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governmental benefits. 
Prior to the enactment of the 

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Omnibus Budget Reconciliation 
Act of 1993, it was possible to 

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create a self settled 
discretionary trust for the 

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benefit of the settler and still
allow the settler to qualify for

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Medicaid's longterm nursing care
benefits. 

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These trusts were called 
Medicaid Qualifying Trusts and 

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QT and did not require an 
individual to be disabled to 

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qualify for Medicaid, merely 
impoverished. 

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The settler of an MQT 
impoverished themselves simply 

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by transferring their assets to 
the MQT, but they still had 

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access to the use of such funds 
for their unrestricted general 

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support. 
Recognizing that numerous 

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individuals who were otherwise 
solvent were qualifying for 

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governmental benefits through 
the use of MQT's, Congress 

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deemed MQT's to be abusive and 
disallowed their use In 1992 

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Medicaid Exemptions. 
Congress recognized that 

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disabled persons were a special 
class of individuals who 

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benefited from the use of MQT's 
and thus permitted the 

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establishment of supplemental 
needs Trusts. 

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A Supplemental needs trust will 
be legally valid so long as the 

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trust in question meets several 
preconditions. 

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As per Title 42, United States 
Code, It must be a spendthrift 

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trust. 
It must be irrevocable. 

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The beneficiary has to be a 
person who exhibits a 

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significant impairment in areas 
of daily living. 

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It has to be established prior 
to the beneficiary 65th 

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birthday. 
It has to function under its own

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Employer Identification Number, 
EIN. 

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Until December 2016, it could 
only be established by a parent,

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grandparent, guardian or court. 
It must contain required 

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Medicaid payback language, 
whether repayment is applicable 

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or not. 
These trusts were called Special

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Needs Trusts or Supplemental 
Needs Trusts because the 

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restrictive language in the 
trust agreement allowed the 

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trustee to pay only for the 
needs of the beneficiary, which 

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the government did not pay. 
And S&T is not, like many other 

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trusts, designed for the support
and maintenance of the 

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beneficiary. 
Nor is the beneficiary allowed a

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yearly distribution of trust 
funds via crummy clause. 

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First party self settled 
Supplemental Needs Trusts, a 

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disabled beneficiaries own 
assets can form the Corpus of a 

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Supplemental Needs Trust, 
although an individual's assets 

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are usually considered to be 
accountable resources for 

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purposes of qualification. 
For Medicaid, the Supplemental 

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Needs Trust Statute permits an 
individual to fund an S&T 

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without being penalized. 
Generally, divestment of assets 

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for purposes of Medicaid 
qualification will trigger a 36 

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to 60 month look back by 
Medicaid in which all asset 

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transfers of the would be 
beneficiary are examined. 

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If found to be made specifically
to qualify for Medicaid, the 

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transfer will be disallowed. 
The Special Needs Trust statute 

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however, allows a disabled 
beneficiary to divest themselves

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of assets for purposes of 
Medicaid qualification provided 

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that the assets are placed into 
the Supplemental Needs Trust. 

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Such assets would then form a 
first party self settled special

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needs trust and would not 
trigger the look back provision.

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First party assets can be added 
to subsequently if a trustee 

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employees a specialized 
affidavit. 

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Until enactment of the Special 
Needs Trust Fairness Act 

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provisions of the 21st Century 
Cures Act in late 2016, a first 

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party or self settled trust had 
to be created by a parent, 

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grandparent, guardian, or court.
The statue did not allow the 

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disabled individual to create 
his or her own trust, even if he

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or she was otherwise legally 
competent. 

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The 21st Century Cures Act 
amended 42USC by adding the 

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individual to the list of people
who can establish a first party 

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trust. 
Third Party Supplemental needs 

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trusts. 
Any third party, as opposed to 

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the beneficiary who is referred 
to as the first party, is free 

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to create a supplemental needs 
trust for the benefit of a 

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disabled beneficiary with his or
her own assets. 

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The same basic rules apply as to
the spendthrift, irrevocable 

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nature of the SNT formed by a 
third party. 

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As well as the age 65 limitation
and the requirement for a nine 

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Medicaid payback provision, 
there is a requirement that 

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under certain circumstances, the
State must be reimbursed for 

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Medical assistance paid for 
through the Medicaid system. 

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Hence, the law requires that all
Special Supplemental Needs Trust

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contain a payback provision 
specifying that any assets 

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contained within an S&T are 
subject to a lien by Medicaid 

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upon the death of the disabled 
beneficiary. 

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Whether a lien is assessed or 
not. 

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It is important to note that 
Medicaid liens and paybacks do 

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not apply to 3rd party S and 
T's. 

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They do apply to 1st party self 
settled S and T's. 

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However, Medicaid payback, even 
in the latter case, is not 

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automatic. 
The state must indicate its 

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interest in the avails of the 
SNT through the filing of a 

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lien. 
Thus, a first party SNT may have

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limited utility when its 
secondary goal is to pass assets

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of the disabled individual to 
family members or other 

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remainder men. 
This is because the sole purpose

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of SNT's is to provide an 
enhanced quality of life for the

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Medicaid beneficiary Qualified 
Income Trust, Miller Trust or 

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Utah Gap Trust. 
A qualified income trust, QIT or

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Miller Trust can be used to 
qualify an applicant for 

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Medicaid when that applicant has
high longterm medical expenses 

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that consume their actual income
but still have countable income 

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limits in excess of the Medicaid
eligibility limit, which may 

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vary in different states. 
The difference between the 

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actual and countable income 
amounts is referred to as the 

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gap from which this type of 
trust takes one of its several 

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names. 
The kid is most often used when 

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nursing home, SNF, or adult 
living facility HRF or a LF. 

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Costs are sought from Medicaid. 
The Miller Trust can be named as

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recipient of the individual's 
income from a pension plan, 

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Social Security, or other 
source, effectively 

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impoverishing them for this 
purpose. 

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Income that is routed into a 
Miller Trust each month, as 

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received, is no longer counted 
for Medicaid eligibility. 

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The Trust provides a specific 
manner in which funds in the 

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Trust will be spent each month. 
A Miller Trust does not provide 

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any assistance with accountable 
resources. 

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Requirement for Medicaid and 
assets other than monthly income

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are not contributed to a Miller 
Trust. 

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Upon the death of the 
beneficiary, the state Medicaid 

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agency must be paid back for its
medical assistance from any 

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remaining assets in the Miller 
Trust. 

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00:12:25,800 --> 00:12:29,240
This is similar to the payback 
provision of an SNT, and kits 

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are sometimes considered a form 
of SNT. 

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00:12:32,040 --> 00:12:35,040
The Miller Trust takes its name 
from the Colorado case of Miller

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00:12:35,040 --> 00:12:39,870
V Barra 1990 and is specifically
sanctioned by 42 USC. 

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00:12:40,430 --> 00:12:43,510
It is likewise called the Utah 
Gap Trust because the shortfall 

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00:12:43,510 --> 00:12:46,070
between the two amounts reminded
the attorney of the space 

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00:12:46,070 --> 00:12:48,110
between Buttes in the Utah 
countryside. 

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00:12:48,630 --> 00:12:52,230
The Miller Trust is significant 
only in those states, about half

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00:12:52,430 --> 00:12:54,470
which impose an income cap on 
Medicaid. 

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00:12:54,470 --> 00:12:59,350
Longterm Care Eligibility Pooled
Income Special Needs Trust A 

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00:12:59,350 --> 00:13:02,510
nonprofit pooled income special 
Needs Trust is authorized 

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00:13:02,510 --> 00:13:06,370
BY42USC. 
Again, the individual must be 

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00:13:06,370 --> 00:13:08,930
disabled under the Social 
Security definition. 

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00:13:09,450 --> 00:13:12,210
Unlike the other exempt trusts, 
which can be administered by a 

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00:13:12,210 --> 00:13:15,290
private trustee who is an 
individual, such as a family 

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00:13:15,290 --> 00:13:17,610
member. 
The pooled income trust is run 

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00:13:17,610 --> 00:13:21,130
by a nonprofit association and a
separate account is maintained 

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00:13:21,130 --> 00:13:24,850
for each individual beneficiary.
All accounts are pooled for 

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00:13:24,850 --> 00:13:26,930
investment and management 
purposes. 

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00:13:27,410 --> 00:13:30,890
The trust, or more accurately, 
an account in the pooled trust, 

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00:13:31,090 --> 00:13:33,770
may be created by the 
beneficiary or a parent, 

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00:13:34,030 --> 00:13:38,390
grandparent, guardian, or court.
In some states, a disabled 

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00:13:38,390 --> 00:13:42,270
individual over age 65 is 
entitled to transfer assets to a

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00:13:42,270 --> 00:13:44,950
pool trust and then be 
immediately eligible for 

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00:13:44,950 --> 00:13:47,750
Medicaid. 
In other states, the transfer 

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00:13:47,750 --> 00:13:50,790
must be made before the disabled
individual attains the age of 

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00:13:50,790 --> 00:13:53,550
66. 
Upon the death of the disabled 

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00:13:53,550 --> 00:13:56,550
individual, the balance is 
either retained in the trust for

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00:13:56,550 --> 00:13:59,630
the nonprofit association or 
paid back to the state Medicaid 

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00:13:59,630 --> 00:14:01,670
agency for its Medical 
Assistance. 

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00:14:02,270 --> 00:14:05,270
All 50 states have at least one 
state approved pulled Special 

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00:14:05,270 --> 00:14:09,030
Needs Trust distributions from a
Special Needs Trust. 

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00:14:09,550 --> 00:14:12,390
There are few restrictions on 
the distributions A trustee may 

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00:14:12,390 --> 00:14:15,910
make from an S&T, as long as the
distribution is for supplemental

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00:14:15,910 --> 00:14:19,150
and extra care over and above 
what the government provides and

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00:14:19,150 --> 00:14:21,510
is not for support and 
maintenance as defined by the 

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00:14:21,550 --> 00:14:24,550
eligibility rules of 
Supplemental Security Income as 

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00:14:24,550 --> 00:14:28,500
food and Shelter. 
In practice, however, an SNT can

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00:14:28,500 --> 00:14:31,340
fund social engagements and 
activities and can pay for 

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00:14:31,340 --> 00:14:34,660
adaptations to a home in the 
upkeep of those adaptations. 

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00:14:35,180 --> 00:14:37,260
Revocation of a special needs 
trust. 

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00:14:37,820 --> 00:14:41,420
Although SN T's are irrevocable,
that irrevocability only applies

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00:14:41,420 --> 00:14:44,140
to the instructions written into
the instrument itself. 

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00:14:44,380 --> 00:14:47,380
Once the trust is executed, the 
text cannot be altered. 

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00:14:47,900 --> 00:14:50,700
Special needs trust can 
otherwise be revoked according 

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00:14:50,700 --> 00:14:53,180
to their own terms as written 
into the document. 

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00:14:53,340 --> 00:14:56,770
If the trust corpus is 
exhausted, for example, the 

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00:14:56,770 --> 00:14:59,610
discretionary power of 
revocation belongs wholly and 

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00:14:59,610 --> 00:15:02,730
solely to the trustee. 
However, revocation may 

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00:15:02,730 --> 00:15:05,810
interfere with the receipt of 
governmental benefits or may 

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00:15:05,970 --> 00:15:09,850
with first party SN T's trigger 
a Medicaid repayment, so a 

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00:15:09,850 --> 00:15:13,170
trustee needs to use extreme 
caution in making this decision,

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00:15:13,730 --> 00:15:17,490
and SNT may be revocable by a 
thirdparty settler under limited

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00:15:17,490 --> 00:15:20,970
circumstances. 
Note, however, that revoked 

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00:15:20,970 --> 00:15:24,410
trusts are not completed gifts 
for gift and estate tax purposes

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00:15:24,700 --> 00:15:27,260
and may subject the settler to 
tax implications. 

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00:15:27,780 --> 00:15:31,380
Also, if the SNT is revoked for 
reasons other than good cause, 

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00:15:31,540 --> 00:15:34,460
the disabled beneficiary who 
relies on it may have legal 

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00:15:34,460 --> 00:15:37,580
recourse against the settler for
loss of governmental benefits 

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00:15:37,580 --> 00:15:38,340
and damages.