What Is a First Party Special Needs Trust?

People with disabilities often rely on need-based government benefit programs. Medicaid is a health insurance program. It is jointly administered by the federal government along with each state government. Supplemental Security Income is another need-based benefit program that provides income for people with disabilities.  Since these are need-based programs, there are income and asset limits. It is possible to use a special needs trust to make assets available to enhance the beneficiary’s quality of life without jeopardizing ongoing government benefit eligibility.

First Party Special Needs Trusts

A first party or self-settled special needs trust can be created by the parent or grandparent of a person with a disability or by the person himself or herself (following the passage of the Special Needs Fairness Act). The funding for a first party special needs trust would come from the beneficiary’s own assets. These funds could come from a personal injury settlement, an inheritance, or an insurance policy, for example.

The trustee named in the trust declaration would administer the trust, and the beneficiary would not be able to access the assets in the trust without the trustee’s permission.

Medicaid and Supplemental Security Income are not going to pay for everything that the beneficiary may need. The unmet needs can be satisfied by assets that have been conveyed into the first party special needs trust. As long as all of the rules are followed, benefit eligibility would not be jeopardized.

When a first party special needs trust has been established, the Medicaid program would seek reimbursement from the estate of the beneficiary after his or her passing so you need to be aware of that.

If you wanted to use your assets to fund a special needs trust for the benefit of a loved one, this would be a third party special needs trust rather than a first party special needs trust. Similar rules apply to the trustee’s ability to use assets in the trust to satisfy the supplemental needs of the beneficiary.  However, the Medicaid program would not seek recovery after the death of the beneficiary.

Free Report on Special Needs Trusts

You must act in a fully informed manner if you have a person with special needs in the family. To learn more about special needs trusts, download our in-depth report.

This report is being offered to our readers free of charge at the present time, and you can obtain access through this website. To get your copy, click this link and follow the simple instructions: Charlotte NC Special Needs Planning.

Schedule a Free Consultation

There is a lot to take into consideration when government benefit eligibility is a factor. Our firm can help if you have questions about special needs planning.

We offer free consultations, and we would be glad to assist you. To set up an appointment, send us a message through this page: Charlotte NC Estate Planning Attorneys.