When a family member has a disability, planning for long-term care involves more than a standard will. At Kreisher Marshall & Associates, our special needs planning lawyers help State College, PA families build estate plans that support a loved one’s quality of life while protecting access to public benefits. A special needs trust can be a central part of that plan.
How Public Benefits Shape Special Needs Planning
Many people with disabilities rely on Supplemental Security Income (SSI) and Medical Assistance, Pennsylvania’s Medicaid program. SSI and many Medical Assistance categories are means-tested so that eligibility can depend on income and assets. For SSI, an individual’s countable resources generally cannot exceed $2,000.
A gift or inheritance left directly to someone with a disability can push countable resources above program limits. Depending on the circumstances, that can interrupt cash benefits or affect access to health coverage and long-term support.
What a Special Needs Trust Can Do
A properly drafted special needs trust can hold assets for a person with a disability without those trust assets automatically being treated as the beneficiary’s own countable resources. A trustee manages the funds and may make distributions for supplemental needs such as:
- Education, tutoring, and vocational training
- Recreation, travel, and social activities
- Personal care attendants and respite services
- Electronics, furniture, and adaptive equipment
- Medical and dental expenses not covered by insurance
Whether a beneficiary remains eligible for SSI or Medical Assistance depends on the trust structure, the source of the funds, and how distributions are administered. Families should coordinate the trust with the specific benefit programs involved.
First-Party and Third-Party Special Needs Trusts
The two primary trust categories differ in how they are funded and what happens to remaining funds:
- Third-party trusts are funded with assets belonging to parents, grandparents, or other third parties. Properly structured third-party trusts generally do not require repayment of Medical Assistance from the trust remainder at the beneficiary’s death.
- First-party trusts hold the beneficiary’s own money, such as a personal injury settlement or an inheritance already received. These trusts are subject to additional federal and state requirements, including Medicaid payback provisions.
Because the rules differ, families should identify the source of the money before deciding which trust structure fits the plan.
Coordinate the Trust With the Rest of the Estate Plan
A special needs trust should work together with wills, beneficiary designations, guardianship or decision-making arrangements, and a letter of intent. Families also need to choose a trustee and successors who may manage distributions for many years.
Plan for Your Loved One’s Future With Our Firm
Our State College special needs planning attorneys at Kreisher Marshall & Associates, LLC, help families throughout Central Pennsylvania create plans designed to protect benefits and reflect their long-term goals. Call 570-784-5211 or message us online to schedule a meeting with a lawyer.