Individuals with disabilities often require much support and care, which can come at a high financial cost. For most people, these costs can only be covered by benefits from government programs such as Medicaid and Supplemental Security Income (SSI). However, these are low-income programs, which means people who receive any income or have savings above a specific threshold risk being disqualified from receiving this government support.
A Supplemental Needs Trust can allow a person with disabilities to maintain a certain degree of financial independence without losing access to their benefits. Keep reading to learn more about supplemental needs trusts or contact our Tampa Special Needs Lawyers today to discuss this important planning tool.
Supplemental Needs Trusts: The Basics
A trust is a legal entity that establishes a relationship between a trustee, who manages the assets within the trust, and a beneficiary, who benefits from those assets. In a Supplemental Needs Trust, a beneficiary is a person with a disability who would not qualify for means-tested government benefits if not for the trust. The funds in this trust can be used for expenses not covered by government benefits.
A trustee oversees how funds from a Supplemental Needs Trust are distributed. They may distribute funds to third parties to pay for certain expenses on behalf of the beneficiary. These expenses include:
- Personal care items
- Phone, cable, and internet
- Tuition, books, and tutoring
- Transportation, including purchasing one vehicle, related maintenance, and gas
- Entertainment and travel
- Computers and other electronic devices
- Medical equipment, therapy, care management, and medications
- Clothing
- Household furnishings
However, keep in mind that a Supplemental Needs Trust may not distribute cash directly to the beneficiary. All payments for goods or services must be made to the retailer or service provider for the benefit of the person with the disability. Failure to strictly observe this rule may lead to an invalidation of the Supplemental Needs Trust.
Types of Supplemental Needs Trust
There are two types of Supplemental Needs Trusts:
- Self-settled Supplemental Needs Trusts are created when the trust is funded using the funds of the person with disabilities. These trusts can be helpful for those who have inherited wealth, received a court settlement, or previously owned assets.
- Third-party supplemental needs trusts are funded by someone other than the individual with disabilities. They are often created as a part of an estate plan to ensure that additional funds are available when needed.
The most significant difference between these two is that the remaining funds in self-settled Supplemental Needs Trusts must be paid back to Medicaid upon the beneficiary’s death. Third-party Supplemental Needs Trusts do not have this requirement, and residual beneficiaries receive any remaining funds.
Contact a Tampa Special Needs Lawyer
If you are concerned that you or a family member might be disqualified from receiving disability benefits because of your income or assets, speak to our experienced Tampa special needs lawyers today. We can help evaluate whether a supplemental needs trust may be your best option. To schedule an appointment at our Brandon law firm, simply call us at (813) 438-8503.