Special Needs/Supplemental Needs Trust

For a child with a developmental or intellectual disability, it is important to be eligible for Medicaid and SSI benefits. Any inheritance would remove eligibility until the amount inherited would be fully spent. Instead, the funds could go into a trust that would not affect eligibility and the trustee could still use the money for the child’s benefit.

A. Common Law
B. D4A Trust
C. Charitable Pooled trust
D. Ohio Supplemental Services trust
E. Comparison of SNT trusts

Common Law SNT

This is the type of trust most often advised to clients since in the opinion of the author a properly drafted SNT will be a non-countable resource under Medicaid/SSI law. Most clients do not like the idea of a payback to the State after a lifetime of paying taxes and then paying tax upon their death. The restrictions of the other SNT are also a disadvantage. Most Settlors also prefer to name their descendants as the remaindermen. Of course, this is not an option for the personal injury plaintiff or beneficiary of a Will who must rely on a Court created trust (D4A or D4C).

D4A TRUST (Federal Statute)
42 U.S.C. 1396p(d)(4)(A)
AKA Payback Trust, Special Needs Trust

Legislative History

The federal special needs trust statutory exceptions were passed as part of federal legislation making numerous changes to the Medicaid statute. [OBRA 93 (P L 103-66)]. This was the first expression by Congress stating a congressional policy permitting special needs trusts and continuing eligibility for special needs persons. Prior to such time, there was much litigation with common law special needs trust between applicants and the states. Many states opposed such trusts on policy grounds.

General Requirements for the Trust

A D4A trust is a trust containing the assets of a