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A special needs trust is a revocable or irrevocable trust established with the assets (income or resources) of a person under age 65 who meets the SSI programs disability criteria. The trust must be established for the persons benefit by a parent, grandparent, legal guardian, a court or the person.
What Can My Special Needs Trust Pay for Without Affecting My Disability Benefits? Funds held in a properly drafted special needs trust will not affect a Supplemental Security Income (SSI) or Medicaid recipients benefits. But problems can develop when funds come out of a special needs trust.
Establishing a trust fund for your minor children enables them to have access to the funds that they may need in case you pass away.
Disadvantages of a Pooled Pay-Back Trust: Funds are not readily available to the grantor/beneficiary; payments to providers must be requested and justified as reasonable and necessary. Fees and Medicaid costs must be paid before remaining assets are distributed to those named Remainder Beneficiaries.
Some of the reasons that a SNT may be inappropriate are: The beneficiary does not or may never qualify for meaningful public benefits. The beneficiary may not be receiving means-tested public benefits, such as SSI and Medicaid, and may never require such benefits in the future.
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Thus, for tax benefits, a SNT can be named as a beneficiary for an IRA. However, payments from a SNT must be solely in the discretion of the trustee in order for the trust not to be considered a resource for SSI or needs based benefits.
A special needs trust (SNT) is a trust that will preserve the beneficiarys eligibility for needs-based government benefits such as Medicaid and Supplemental Security Income (SSI). Because the beneficiary does not own the assets in the trust, he or she can remain eligible for benefit programs that have an asset limit.
A Trust that does not require distribution of all its income by the terms of the trust agreement is called a Complex Trust, and is allowed an exemption of $100. A Qualified Disability Trust or QDT is allowed the same exemption as an individual under IRS Code 642(b)(2)(C).
The Special Needs Trust can be used to provide for the needs of a person with a disability and supplement benefits received from various governmental assistance programs, including SSI and Medi-Cal. A trust can hold cash, real property, personal property and can be the beneficiary of life insurance policies.
Federal law requires you to report to the Social Security Administration if you are the beneficiary of an inheritance even if you refuse to accept the inheritance. Failing to report an inheritance can result in financial penalties and cause your SSI payments to stop for up to three years.

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