Trust planning for loved ones

Special Needs Trust Planning Success Story

A person who was referred by their neighbor who is an individual with special needs recently called our office.  The person’s son had special needs and the family was hoping to qualify him for public benefits (such as Medicaid and SSI), but he was denied several times.  The family attended a special needs trust workshop that we held, and then met with us for a free consultation.

After meeting with them and understanding the facts, we were able to create a special needs trust for the son, to allow him to take the excess resources that he had in his own name and still qualify for public benefits such as SSI and Medicaid.  The value of the benefits to him was substantial. After we completed the special needs trust, the son reapplied for public benefits and was approved.

There are two types of special needs trusts: First-party and third-party special needs trusts.  A first-party special needs trust allows an individual to plan so that he or she can keep excess resources which he or she owns and still qualify for public benefits during his or her lifetime.  

The downside of the first-party special needs trust is that it is a payback trust, which means if there is any money left over, the state of Pennsylvania will get paid back up to the amount of benefits that were provided during the disabled individual’s lifetime.  In this case, however, given how young the disabled son is, we fully expect that the trustee will pay out all money during his lifetime, and there probably won’t be anything left to pay.

The family was ecstatic that he is able to get the benefits that he has been denied several times, and we were pleased to be able to assist them in getting him qualified.  The story does not end there, however.

The son’s grandparents passed away suddenly in a tragic car accident.  However, before their untimely passing, we also had met with them. They had mentioned that their grandson had special needs, and they wanted to provide a small inheritance to him because they knew that he would probably need more than their other grandchildren.  

We created a third-party special needs trust for his benefit for his portion of their estate. This third-party special needs trust, which was funded with the grandparents’ money, does not have any payback provisions to the state of Pennsylvania. The rationale behind this is that the money was never the grandson’s, and therefore the state cannot require it be paid back for their services.  

Happily, we were able to not only get the son qualified for benefits even though he had excess money, we were also able to create a plan which allowed him to continue those benefits even though his grandparents unexpectedly died.  

It is essential that families who have individuals with special needs engage in proper planning, and it is not only the parents who need to make sure that this occurs. Any family that has a child or individual with special needs should seek proper planning advice from a professional who understands special needs trust planning in Pennsylvania.  If you would like to learn more about special needs trust planning, please contact our office by calling 717-845-5390, or click here to fill out our short form online.