Supplemental Needs Trusts are designed to protect assets and offer supplemental financial assistance to individuals with disabilities while also allowing them to create or maintain eligibility for government benefits such as Medicaid (MA) and Supplemental Security Income (SSI).
A pooled trust is a type of trust where funds from multiple beneficiaries are pooled (combined) for investment purposes, but each beneficiary has their own sub-account. This allows for more efficient management of trust funds and can provide cost savings for beneficiaries who might not otherwise have access to professional trust management services. While this type of trust is often created in reaction to an individual with disabilities having received funds unexpectedly, RCFS will accept Supplemental Needs Pooled Trust Joinder/Master Trust Agreements that have been completed, dated, and signed, but are not immediately funded. This is a great financial planning tool that is immediately available to accept any and all excess assets that could render an individual ineligible to receive benefits.
A Third-Party Funded Supplemental Needs Trust permits a family to plan and financially provide for an individual with disabilities without affecting the individual’s eligibility for government benefits. These trusts are created and funded by a third party (the Settlor). They are often created and funded by relatives and can exist as part of their will (a Testamentary Trust), or they can be created, funded, and funds can be disbursed while the Settlor is still alive (Inter-Vivos Trust).
A payback trust, also called a special needs trust, holds, and manages assets for a person with a disability. These trusts are designed to provide for the needs of the person with a disability without affecting their eligibility for government benefits. Any assets remaining in the trust when the person dies are first used to “pay back” the government for Medicaid (MA) benefits received during the beneficiary’s lifetime from the date the trust was created.
This type of trust is usually established by a parent, grandparent or other family member, and the funds are managed by a trustee. The trustee can disburse the funds for qualifying expenses such as tuition, books, and room and board. The trust can have specific conditions or restrictions on how the funds are used, and any unused funds may revert to the trust or be distributed to the beneficiary.
This type of trust is established by the individual or their family to ensure that there are adequate funds to pay for the funeral and burial costs. The funds are managed by a trustee and can only be used for qualified funeral and burial expenses. The trust can have specific conditions or restrictions on how the funds are used, and any unused funds may be distributed to the deceased’s estate, successor beneficiaries, or revert to the trust.
