Special Needs Trusts – An Overview

Special Care Planning is a process. 

Working as a Special Care Planner, Ellyn Novak Hefner’s process is to encourage communication with the family’s network; providing information, education and resources, and offering holistic solutions unique to each individual’s situation. This includes outreach to families and professionals to understand ABLE, Achieving a Better Life Experience. Oklahoma’s ABLE account is OKSTABLE. 

A Special Needs Trusts is a part of the process.

Jennifer Wright is an Estate Planner at Ball Morse Lowe in Oklahoma City. She works with families who have a child with special needs in creating a Special Needs Trust. Ellyn asked Jennifer to answer a few questions that families have about special needs trusts.  

What is a special needs trust?

A special needs trust or “supplemental needs trust” (SNT) is a trust established for someone who is receiving or who at some point may receive Medicaid or other state/federal benefits. 
And, what are some reasons to create a special needs trust?
The SNT provides for the individual’s supplemental needs without disqualifying the person from benefits.

What types of government benefits are there for disability? 

    • Social Security Disability Benefits (SSDI): These benefits may be available to disabled or blind persons who have had earnings and made contributions to Social Security. 
    • Supplemental Security Income (SSI): This program provides benefits for aged, blind and disabled persons with limited resources and income.
    • Medicare: In addition to providing health coverage for people over age 65, Medicare is available to disabled persons under age 65 who have been receiving SSDI checks for 24 months.
    • Medicaid: Medicaid is a public assistance program that provides health coverage for individuals with limited resources and income. 

How can a trust protect these benefits?

Eligibility for Medicaid and SSI is based on a person’s resources and income. Resources and income above the allowable limits would make a person ineligible for these benefits. Assets in a Special Needs Trust would not count as the person’s resources for purposes of qualifying for Medicaid and SSI.

What is a third party Special Needs Trust?

A parent or other third party establishes a trust for the benefit of the person receiving benefits with the third party’s assets. This trust can be funded now or through an estate plan upon death of the third party. Because this trust is not funded with the disabled person’s assets, there is no requirement for a Medicaid pay-back provision in this trust.

What are alternate methods for funding a third party trust?

A third party Special Needs Trust can be funded with life insurance, retirement assets or any other assets designated by the third party establishing the trust.

What is the process to set up a trust? 

An attorney experienced in special needs planning will determine which type special needs trust is necessary and provide guidance on important decisions like selecting a trustee and whether to include provisions for a care manager and trust advisor.
A Special Needs Trust should be part of a comprehensive estate plan, which would also include planning for other beneficiaries through a revocable trust or will, durable powers of attorney (financial and medical), living will and other important documents. Implementing a comprehensive estate plan will ensure loved ones will be cared for and will provide peace of mind. 

Special Needs trusts work alongside OKSTABLE accounts. 
Questions? Call  Ellyn Hefner 405-640-9408 about Special Care Plans or Jennifer Wright about Special Needs Trusts at 405 701-6968.

Note: This is adapted from a recent story in the print edition of The City Sentinel newspaper.