Special Needs Trusts Lawyer in Utah
A special needs trust can be created through a
living
trust or as a testamentary trust created through a
last
will and testament.
When established and managed correctly, a special needs trust can
significantly improve the quality of life for someone with special
needs. This page is intended only to provide general information
regarding special needs trusts in Utah, and should not be considered as
legal advice. For assistance in creating a special needs trust,
contact
us today to see what the right
attorney can do for you.
Purpose of a Special Needs Trust

The
general purpose of a special needs trust is to provide supplemental
assistance and care, beyond the traditional HEMS (health,
education, maintenance, and support), for an individual with
special needs who qualifies for needs-based government benefits such as
Medicaid and Supplemental Security Income (SSI), without disqualifying
the individual from eligibility to receive such government
benefits. When properly titled, designated, and administered,
assets held in a special needs trust can be used to improve trust
beneficiary’s quality of life while still allowing the individual to
receive needs-based government benefits intended to provide for the
basic necessities of life. Proper establishment and
management of the trust is critical to maintaining eligibility for
government benefits and ensuring that the grantor’s intent will be
accomplished.
Types of Special Needs Trusts
There are two main types of special needs trusts, self-settled or first
person trusts and third party trusts. A third, less common type of
special needs trust is sometimes referred to as a "sole benefit" trust.
SELF-SETTLED or FIRST PERSON TRUST - "Self-settled" special needs
trusts are
established by the beneficiary or by someone acting on the
beneficiary's behalf using the beneficiary's funds with the goal of
retaining or obtaining public benefits eligibility. The funds for this
type of trust can come from an inheritance, a lottery win, or most
commonly, proceeds from a lawsuit. A self-settled trust must
include a provision directing the trustee, if the trust contains any
funds upon the death of the beneficiary, to pay back anything the state
Medicaid program has paid for the beneficiary. Also, in most states the
rules that govern the distributions for self-settled special needs
trusts are significantly more restrictive than those controlling
third-party special needs trusts. "Because Social Security law
specifically describes self-settled special needs trusts, these
instruments are sometimes referred to by the statutory section
authorizing transfers to such trusts and directing that trust assets
will not be treated as available and countable for SSI purposes. That
statutory section is 42 U.S.C. §1396p(d)(4)(A), and so self-settled
special needs trusts are sometimes called, simply, "d4A" trusts."
THIRD PARTY TRUST - A "third-party" special needs trust is
set up by someone, like a parent, using assets that never belonged to
the beneficiary. With proper planning, a third-party special needs
trust can be used to hold an inheritance or gift. (Without proper
planning, a well-meaning family member might simply leave an
inheritance to an individual with a disability. Even though the funds
came from a third party, the funds will have been available to the
beneficiary, thus the trust will be a "self-settled" special needs
trust.) A third-party special needs trust does not have a payback
provision and the kinds of payments are usually more generous and
flexible.
SOLE
BENEFIT TRUST - Another type of special needs trust that is
rarely used
is a "sole benefit" trust. Under Medicaid rules applicants are
permitted to make
unlimited gifts to or "for the sole benefit of" disabled children or
spouses. Some individuals with assets may choose to establish this type
of special needs trust for a child or grandchild with disabilities
hoping to secure Medicaid eligibility for both themselves as grantor
and for the disabled beneficiary. Most state are highly restrictive in
their interpretation of the "sole benefit" requirement. This
type of trust is taxed and treated as third-party trusts in many
respects, but require a
payback provision like self-settled trusts.
Learn More:
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Lawyers in Utah
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that are custom tailored to meet their individual and family needs. If
you are just considering establishing an estate plan, or if you have an
existing plan that is in need of review and revision, contact us today
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consultation. See what the right
attorney can do for you.
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