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Special Needs Estate Planning

Special needs planning involves establishing a trust to hold assets for the use and benefit of a disabled person.  There are several types of special needs trusts (“SNT”) that can be utilized:

• Revocable SNT.  This trust is set up by a third party, i.e. a parent, grandparent or other relative.  The assets are still in estate of grantor, and any assets of the disabled person on this trust will be considered available resources.
• Irrevocable SNT.  Transfers to this kind of trust are a current gift that do not qualify for the annual exclusion.  Assets of the disabled person in this type of trust will be considered available resources.
• The (d)(4)(A) Trust.  This is a type of irrevocable trust set up for a person who has or is about to receive assets that would disqualify him from receiving public benefits.  It can be established by a parent, grandparent, legal guardian, or court using the assets of a disabled person under the age of 65.  The state must be reimbursed from the trust at the disabled person’s death
• The (C)(2)(B)(iv) Trust.  This is a trust created by a parent for a disabled child or for a disabled person under 65.  Transfers of the disabled person’s assets to this trust are not considered disqualifying transfers by the trustor for Medicaid purposes.  The distributions must be (a) actuarially sound and for the sole benefit of the disabled person, or (b) that the state be reimbursed from the trust corpus upon the disabled person’s death.  It should only be used where the trustor is otherwise eligible for Medicaid.  The initial trustee should be someone other than the trustor to avoid Medicaid inclusion of assets.
• The 76-270 trust.  This irrevocable trust is used as a receptacle for unitrust income payments from a Charitable Remainder Trust.

Please contact us if you are interested in learning more about special needs trusts.

Business, Corporate, and Estate Planning Attorney Vincent J. Profaci, P.A., assists Clients with Business Operation and Management, Business Succession Planning, Business Purchase and Sale, Estate Planning, Trust Administration, Wills & Trusts, Estate and Gift Tax Planning, Probate and Guardianship, Estate Administration, and Real Estate Law.  

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