Did you know that special needs planning is typically part of the elder law practice? Elder law attorneys do not just work with older adults- we often work with younger individuals with special needs or disabilities and their families. Special needs planning involves understanding eligibility for government benefits (e.g., SSI, AHCCCS, ALTCS, DES-DDD, and more), guardianship and conservatorship, ABLE accounts, and estate and special needs planning with use of special needs trusts. It takes a comprehensive plan to provide the solutions you or your loved one with special needs requires; there is no one-size fits all special needs trust or plan.   

In general, the aim of a Special Needs Trust is for the trust assets to be used to supplement the needs of the disabled beneficiary while also maintaining the beneficiary’s eligibility for other private means or public benefits available to the trust beneficiary. There are two main types of Special Needs Trusts: (1) First-Party Special Needs Trusts established under 42 USC 1396p(d)(4)(A) or (C) which hold the assets of the disabled individual (e.g., lawsuit settlement proceeds, inheritance, personal savings); and (2) Third-Party Special Needs Trusts (also known as Supplemental Care Trusts) established by third parties (i.e., not the disabled individual) and hold the assets of third parties (e.g., parents, grandparents).  

Third Party Special Needs Trusts

If you have a loved one with special needs or disability and you want to leave an inheritance to them upon your death or make lifetime gifts for their benefit, a third-party Special Needs Trust should be considered. This is a common strategy used so the disabled individual will have the benefit of the inheritance without loss in eligibility for means-tested public benefits, such as SSI, AHCCCS or ALTCS benefits. These trusts need to be properly drafted, funded, and administered and can greatly enhance the quality of the beneficiary’s life. Additionally, there is no “pay-back” required to Medicaid agencies at the death of the third-party Special Needs Trust beneficiary.  

First Party Special Needs Trusts

By contrast, a first party Special Needs Trust will contain only the assets of the disabled individual and must be established and funded in strict compliance with federal and state law. Similarly, it must be administered in accordance with requirements of federal and state law for the benefit of the beneficiary which may include certain reporting requirements.  At the beneficiary’s death, there is a mandatory pay-back required to the state Medicaid agencies which provided services for the beneficiary during his or her lifetime. 

Individuals with special needs or disabilities have unique needs, and there is much to consider when contemplating establishing any type of Special Needs Trust. Special Needs Trusts should only be drafted by attorneys who routinely practice special needs planning.  This information is very general and basic; there is much more to know about Special Needs Trusts and how they work. We have the knowledge and experience to guide clients through the Special Needs Trust drafting, establishment, funding, and administration processes. We are equipped to handle these matters and help families create comprehensive plans to take care of their most vulnerable loved ones. We frequently work with other professionals such as care managers, financial advisors, medical professionals, and fiduciaries to ensure clients have information needed to make the best personal, financial, and medical decisions, while taking advantage of the best legal tools to achieve their goals and objectives.  

Call our office at 480-922-1010 or email info@bivenslaw.com to schedule your appointment and see just how we can help you, or your loved one. We love to see families less stressed and prospering from the advice and advocacy we offer. We are here to help!