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Special Needs Planning

Special Needs Planning

Planning for a loved one with special needs requires an understanding of available options and determining the right solution for your circumstances.  Whether establishing a trust, funding a STABLE account, or a combination of both, ensuring your loved one’s financial security without jeopardizing SSI and/or Medicaid eligibility is key.  Depending on who is funding the trust, Ohio has four types of trusts used in planning for someone with special needs:

  • Third-Party Discretionary Trusts
  • Supplemental Services Trusts
  • Medicaid Payback Trusts
  • Pooled Trusts

If you intend to leave an individual with special needs a large amount of money, it is best to fund a special needs trust to protect against jeopardizing continued Medicaid or SSI financial support. A special needs trust is an appropriate way for parents and grandparents to provide a loved one with special needs financial security. It is important to understand the different types of special needs trusts to assure your loved one does not lose the benefits they are already receiving.

Third-Party Discretionary Trust

This trust is funded with assets of a third party, not the assets of the individual who is disabled. Although, there is no payback provision it is important to have terms limiting the trustee’s distributions on behalf of a special needs beneficiary, including, but not limited to expenses not covered by Medicaid or SSI, and must state clearly within the trust that distributions cannot be made for health, comfort, medical care, maintenance, welfare or general well-being. Additionally, the trust should have a “poison pill” whereby the trust is terminated immediately if it is counted as an available resource. Lastly, the trust should provide the trustee sole and absolute discretion to make any distributions on behalf of the individual with special needs.

Supplemental Services Trust

Only a third party can create and fund this trust, not the disabled individual. These funds may only be used for supplemental services and the beneficiary (the individual who is disabled) must qualify for services through the Ohio Department of Disabilities or the County Board of Developmental Disabilities. This trust cannot be funded with more than $250,000 (2019 limit) with the limit increasing $2,000 each year. The trust funds can be used for supplement services such as travel and vacations, hobbies and sports activities. One drawback is that upon the death of the beneficiary, no less than 50 percent of the remaining trust assets must be returned to the state of Ohio.

Special Needs Trust

Funded with assets from third parties and the beneficiary (the individual who is disabled).  The individual, parent, grandparent, Guardian, or a Court may create this trust. But they may only create it for individuals under the age of 65 and who qualify for benefits such as Medicaid or SSI.  The trustee is authorized to pay for things that public benefits do not cover. Upon the death of the beneficiary (the individual who is disabled), the state of Ohio is reimbursed for all expenses paid, up to and including the entire remaining trust assets.

Pooled Trust

A pooled trust can be created by the beneficiary (the individual who is disabled), parent, grandparent, Guardian, or Court, and the beneficiary is deemed the owner of the trust assets. A nonprofit organization serves as the trustee and manager of the trust assets. For investment purposes, trust assets are pooled with other trust assets, but a separate account is maintained for each trust. There is no age restriction for this type of Medicaid payback trust. Upon the death of the beneficiary, the state must be repaid for the Medicaid services that were previously provided.

Determining which type of Special Needs Trust is right for you and your loved one is what we do.  If you would like to learn more about creating and funding a special needs trust, please contact us to schedule a free telephone consultation.

Thank you to the Ohio Developmental Disability Council for a significant portion of the information contained on this webpage.

Trusted Resources

With knowledge and foresight, we assist our clients in being involved and informed in their unique decision-making process. We offer a wealth of information including videos, detailed blog postings on hot topics, informational articles, and comprehensive seminars to educate our clients. If you have any questions, we offer free consultations to discuss your personal needs.