Special Needs Planning

Special needs planning allows parents or grandparents to establish a trust under will or a trust to leave funds for a disabled child. Trusts created with the funds of another are called “Third Party Trusts” and the funds are not subject to payback provision from Medicaid at the beneficiary’s death. These can be created upon death testamentary (will or trust) or may be established during the lifetime of the beneficiary and funded for future use.

First party trusts, or “Self-Settled Trusts” are created used the funds of the beneficiary but under current law must still be created by a parent, grandparent, guardian or court. These funds are subject to a payback provision at the beneficiary’s death if funds remain and there is a Medicaid lien.

Special Needs Trusts for the Disabled

In addition to Third Party Trusts and Self-Settled Trusts, Pooled Trusts are also available for the disabled who may inherit funds, receive a settlement and do not wish to establish a self-settled trust. Pooled trusts are professionally managed but do allow those on Medicaid to keep benefits they currently have or qualify for benefits, if they meet other criteria.