1. (d)(4)(A) – This refers to as federal law or statute that created special needs trusts in 1993. It provides the requirements for these trusts so that the assets in the trusts are not countable. Money transferred to these trusts are not penalized as gifts. This is not referring to the annual gift exclusion of $13,000 per year. This refers to months of ineligibility of gifts are made. This means the beneficiary can qualify right of way.

2. (d)(4)(C) – this is a special needs trust but differs from the (d)(4)(A) trust above in that is funds in a pooled trust. The funds are pooled for investment purposes but a separate account is maintained by the fund. All funds on death are kept by the fund. This encourages help to those with

3. Countable Resources – The assets or resources you must keep under $2,000 qualify for Medicaid. Prepaid funeral expenses in any amount are not counted. A home is not counted.

4. Grantor -

5. Inter-vivos Trusts – create a SNT during lifetime so any family member can have will pour into this trust. A “seed” trust might have $100 just to make it valid.

6. Means tested – benefits that have a financial requirement. You have to prove you qualify to the government agency providing benefits. It is vital in SNT planning that the beneficiary not be disqualified. So if you have a special needs trust or third party supplemental benefits trust and pay rent from it you may disqualify the beneficiary since Medicaid or SSI should cover it. If money is used to pay a provider it is treated as in kind. If a will is set up under someone’s will that doesn’t meet these requirements all is not lost. You can go to court and try to reform the trust. If the beneficiary can compel a distribution from the trust the trust assets will be countable. If you can show that the intent of the person setting up the trust was to benefit the special child they may permit you to reform it.

7. Medicaid – A means tested government medical program. You can only have $2,000 of countable resources. Pays for long term custodial type care. Includes prescription coverage that is much better than Medicare coverage. Those with disabilities typically have very high medical bills and Medicaid is a very important resource. If someone in New Jersey for example gets SSI they automatically qualify for Medicaid. So the most important piece of getting SSI is that it gets you Medicaid qualification.

8. Medicare – For those over age 65 and those under 65 who are disabled who contributed to Social Security system. If you never contributed to Social Security but if disabled before age 22 you can collect under the parent’s Social Security. IF you collect Social Security disability for 2 years you can qualify for Medicare. It is not means tested (i.e., the $2,000 is not applicable). If you only get Medicare you won’t need a SNT. But it does not cover long term custodial care.

9. Payback Trusts – This is often used to refer to a first party SNT so that on the death of the beneficiary the remaining trust assets must first be used to repay Medicaid first, then any remaining assets can be distributed in any manner.

10. Prudent Investor Act -

11. Special Needs Trusts – SNTs are trusts (legal agreements) that an unusual type of trust. Typically the person setting up a trust is the grantor or settlor. But a SNT has to be set up by a court, legal guardian, parent, or grandparent. If the person does not have a parent or grandparent or guardian they will have to go to court to do this. So this type of trust is pretty unique. The language of the trust should say assets can be used to supplement and not supplant what is provided for by government benefits. First party trust is a special needs trust. A third party trust is often called a supplemental benefits trust.

12. Supplemental needs – Medicaid pays medical bills. Supplemental needs are those not covered by Medicaid. It use to include but Social Security took it out of the equation. So a SNT can pay for needs that are not medical, rent or food. It can pay for special wheel chairs, hair needs, personal grooming, vacations, etc. The language of the trust should say assets can be used to supplement and not supplant what is provided for by government benefits. First party trust is a special needs trust. A third party trust is often called a supplemental benefits trust.

13. Supplemental Security Income (SSI) – Needs tested benefit. You must have less than $2,000 not counting their home or prepaid funeral benefits.