Why a Special Needs Trust?
In many situations, a special needs trust is the best solution for protecting benefits and for ensuring that funds are available for future use. SSI and Medicaid regulations allow recipients to have assets held in special needs trust.
Assets held in a properly structured and administered special needs trust will not negatively impact eligibility for benefits. Although the individual with a disability can have no control over or direct access to the special needs trust, distributions can be made for supplemental living and health care needs.
The legal documents for a special needs trust may be drawn up by an attorney and administered through any trust company. The terms of the trust must contain language that specifies the funds are available only to supplement, not supplant benefits to which the Beneficiary is entitled. MSNT is a pooled trust organization w/a Master Trust that has some advantages over creating one with an attorney or administration with another trust company.
- MSNT is a Missouri-based non-profit organization established by statute (402.199– 402.208 RSMo) in the State of Missouri for the purpose of administering Special Needs Trusts.
- Special needs trust are the only type of trust administered by MSNT.
- MSNT is committed to making trust services accessible and affordable for individuals and families with low to moderate income.
- Caring and knowledgeable staff who stay current with public benefit programs.
- MSNT will not make distributions that may cause a loss or reduction in public benefits.
- MSNT provides a Master Trust that is compliant with applicable Social Security and Medicaid statutes, regulations and policies, reserving the right to amend the trust language to comply with any changes in federal and state requirements.
- MSNT assists Beneficiaries and families by providing written documentation that the trust is an exempt asset for Social Security and Medicaid authorities.
MSNT will open and administer a special needs trust for Beneficiaries living in:
- Iowa (Third Party Trusts only)
If the Beneficiary of a trust later relocates outside the MSNT service area, MSNT will continue to administer the trust consistent with the terms and conditions of the trust agreement.
Any person who meets Social Security’s definition of a disability, including those determined for SSI or SSDI.
For individuals 65 and older, contact MSNT to discuss Medicaid polices for potential transfer penalties related to Special Needs Trusts.
Funding a Special Needs Trust
Special Needs Trusts may be funded with the person with a disability’s own funds (first party trust) or with funds by parents, family or friends (third party trust).
Special Needs Trusts funded with the person with a disability’s own resources must contain a Medicaid payback provision at termination.
Typical sources of funds for Special Needs Trusts include:
- Gifts from family, friends, relatives.
- Proceeds of personal injury settlement.
- Proceeds of a life insurance policy.
- Funds or other assets from an inheritance.
- Social Security back payment.
Which Trust Document
MSNT can help determine which Master Trust is appropriate for your situation, whether a first or third party trust. The trust agreement documents will be provided by MSNT upon request for you to complete and submit for review. Sub-Accounts with MSNT are established under the Midwest Special Needs Trust Master Trust. There is a different Master Trust for First and Third Party Trusts.
First Party Trust
First Party Trust sub-accounts are funded with assets of the individual with a disability. The individual with a disability will be referred to as the Beneficiary. Assets can include, personal injury settlements, life insurance payouts, overpayments from Social Security, and conserved funds. At termination, the Medicaid Program can place a lien on the remainder balance in the sub-account. The Medicaid Program must be paid first before any final distributions are issued in accordance with the terms and conditions of the trust agreement.
Third Party Trust
Third Party Trusts are funded with the assets of someone other than the individual with a disability or their spouse. At termination, the Medicaid Program cannot place a lien on the remainder balance. Final distributions will be issued in accordance with the terms and conditions of the trust agreement.
When a Donor funds a third party trust, they will want to make sure their will, life insurance policy or other financial documents note the Special Needs Trust at MSNT for their loved one is listed as a beneficiary. This will ensure the funds are not sent directly to the individual with a disability but instead the Special Needs Trust. MSNTs inactive trust is a financial planning tool to assist Donors in ensuring protection of their loved ones public benefits.