Using a Special Needs Trust in Elder Estate Planning

According to a recent article from the Academy of Special Needs Planners, an elderly person applying for long-term Medicaid benefits for nursing home care can benefit from a sole benefit trust.  Specifically, when a medicaid applicant transfers assets to a special needs trust for the sole benefit of a person with disabilities, the transfer will not disqualify the applicant from receiving medicaid benefits.  

The article warns, however, that a sole benefit trust is unlike a typical special needs trust because the trust cannot have a remainder beneficiary and must pay out all assets over the special needs beneficiary’s actuarial life expectancy.  If the special needs beneficiary is already receiving government benefits through means-based programs, the distributions from the sole benefit trust could very well jeopardize those benefits. 

For more information, see Academy of Special Needs Planners, How a ‘Sole Benefit Trust’ Can Either Hurt or Help a Person With Special Needs, Oct. 23, 2009.