Special Needs Planning
Attorneys at Hilary Carter Law work with individuals with special needs and with their families to create a plan with allow the individual to qualify for benefits and still have resources to provide quality of life.
Special needs planning involves the interplay of estate planning, public benefits, Social Security programs, and special needs trusts. We keep on top of each of these areas to provide you with up-to-day, responsive legal services. We collaborate with your team (caregivers, financial advisor, etc.) to coordinate advice and services.
Special Needs Trusts
Trusts are one way to preserve assets while maintaining an individual with special needs' eligibility for means-tested assets such as Supplemental Security Income (SSI) and Medicaid.
First Party (d(4)(A)) Trusts
A first-party special needs trust, also know as a d(4)(A) trust, is created with the assets of the individual with special needs. A first-party special needs trust may be desirable when an individual with special needs has assets - or expects to receive assets - that would disqualify him or her from eligibility for public benefits. Some examples include:
- An inheritance. Receiving an inheritance can cause an individual with special needs to lose public benefits. We can help prevent that outcome by helping you exablish a special needs trust to hold the inherited assets.
- A settlement from a lawsuit. A first-party special needs trust may allow an individual to receive an award in a personal injury or medical malpractice suit without losing eligibility for public benefits. Settlements often comprise a lump-sum payment and an annuity. Both types of payment can be directed to a first-party special needs trust established by the court as part of the settlement.
- A divorce settlement. If a spouse with special needs is unable to work and qualifies for public benefits, it may be helpful to have a first-party trust incorporated into the divorce settlement. The spouse with special needs can maintain eligibliity for SSI and have medical expenses covered by Medicaid.
- Qualification for benefits. If an individual who has not yet attained age 65 qualifies as disabled under state or federal rules, but is over-resourced, the individual may qualify by placing his or her assets in a first-party special needs trust.
Third Party Trusts
While a first-party special needs trust holds funds that belonged to the individual with special needs, a third-party special needs trust, as the name implies, is funded with assets that never belonged to the trust beneficiary. The third party special needs trust provides several advantages over the first-party trust.
Third-party special needs trusts are set up by a grantor – the person who contributes the funds to the trust. These trusts are typically designed as part of the donor's estate plan to receive gifts that can help a family member with special needs while the grantor is still living and to manage an inheritance for the person with special needs when the grantor dies.
A third-party special needs trust can be named as the beneficiary of a life insurance policy, can hold a house or other real property or investments, and can even receive benefits from retirement accounts (although it is not typically recommended unless there aren't other assets available to fund the beneficiary's inheritance).
Upon the beneficiary's death, the assets in a third-party special needs trust can pass to the person's named in the trust by the grantor. This is unlike a first-party special needs trust that must reimburse the government for Medicaid payments made on behalf of the beneficiary upon the death of the beneficiary with special needs.
We can help you determine if you or your family member is qualified to establish an ABLE (Achieving a Better Life Experience Act) Accounts. ABLE Accounts are tax-advantaged savings accounts for individuals who became disabled before turning 26 years of age. The beneficiary of the account is the account owner, and income earned by the accounts will not be taxed. Contributions to the account may be made by any person (the account beneficiary, family, friends, Special Needs Trust), but must not exceed a total of $15,000 in any given year and may not exceed the applicable state's capped amount (Oregon's cap is $100,000). An ABLE Account protects benefits while still maintaining assets over the $2,000 limit for most government benefits.