Special Needs Trusts
Frequently Asked Questions
What is a special needs trust?
How can a special needs trust be used?
Federal and state regulations require special needs trusts be used for the benefit of the life beneficiary (person with a disability). This can include dental and medical services not covered by other insurances, co-pays, pharmacy, medical supplies, equipment, entertainment, cellphone, cable and other personal needs of the life beneficiary. As trustee, Midwest Special Needs Trust carefully reviews each request for funds to ensure compliance with regulations.
Supplemental needs of the life beneficiary do not include rent, mortgage, room and board, utilities, food or cash to the life beneficiary. Payment for these expenses from the trust may cause a reduction in the life beneficiary’s monthly benefit from Social Security.
What is the difference between a First Party and Third Party Trust?
First Party Trust sub-account, also called self-settled or Medicaid Payback, are funded with assets belonging to the person with a disability. These trust sub-accounts are irrevocable and have a Medicaid payback requirement.
At MSNT, upon the death of the Beneficiary, a 25% contribution of the remainder balance is paid to the MSNT Charitable Trust if the trust was used before the Medicaid payback. After payment of allowable fees and expenses, the Medicaid lien is paid. After which, any remaining balance is paid to any named Remainder Beneficiaries.
Third Party Trust sub-accounts are funded with assets or resources from someone other than the Beneficiary. These trust sub-accounts can be created as revocable or irrevocable and do not have a Medicaid payback requirement.
At MSNT, upon the death of the Beneficiary a 25% contribution of the remainder balance is paid to the MSNT Charitable Trust if the trust sub-account was used. After payment of allowable fees and expenses, the remaining balance is paid to any named Remainder Beneficiaries.
What is a trust versus a trust sub-account?
A Beneficiary’s portion of the pool is called a sub-account. Each type of trust, First Party, Third Party Irrevocable and Third Party Revocable, has its own pool for investment and management purposes. Within each pool, there are six different types of investment portfolios.
Funds deposited for the Beneficiary are pooled together with similar trust and portfolio types for investment and tax optimization purposes. All earnings are individually accounted for.
How are special needs trusts funded?
|First Party or Self Settled Trusts for Beneficiaries <65
|First Party for Persons with Disabilities >65
|Third Party Trusts
How can I establish a special needs trust?
Please call or email MSNT for an initial conversation. The discussion may include information beyond the special needs trust like the ABLE account and other opportunities.
MSNT has an inactive trust option that can be established with $200 to be fully funded at a later date. A Trust Specialist will discuss your specific circumstances and help you with a plan to meet your needs. They will then mail you the appropriate forms. When completed, the initial deposit check and forms are mailed back to MSNT for review and processing.
What decisions must be made when completing the documents?
What is the minimum amount to set up a trust with MSNT?
MSNT’s minimum enrollment balance is $500. An initial deposit will include the enrollment fee. First Party Trust sub-account may qualify for a reduced enrollment fee based on the initial deposit and the Beneficiary’s annual gross income.
Why choose Midwest Special Needs Trust?
What makes MSNT different?
- Created by state statute in 1989 as a pooled trust organization.
- Governed by a Board of Trustees comprised of professionals who have family members with a disability, are named by the Missouri Governor and confirmed by the Missouri State Senate, and comply with the Missouri Ethics Commission requirements.
- A not-for-profit organization supporting the Charitable Grant Program provides grants to Missouri residents who meet the income guidelines and have been deemed disabled by the Social Security Administration.