Special Needs Trusts in Pennsylvania, Delaware, Maryland and Washington, D.C. area FAQs
Trusts and estate law firm with offices in Berwyn, Wyomissing, Scranton, Wilmington DE, and Washington, D.C. area
Trusts lawyers at McAndrews Law Offices assist individuals with disabilities and their families with the creation and administration of special needs trusts.
Public benefits under Medical Assistance, Supplemental Security Income and federal/state mental health or intellectual disability benefits can be jeopardized by a failure to carefully structure a personal injury settlement, inheritance, divorce distribution or retroactive Social Security payment.
The trust attorneys at McAndrews Law Offices, P.C. have been developing special needs trusts for over fifteen years to protect these benefits on behalf of individuals with disabilities. The leading personal injury lawyers throughout Pennsylvania have used our services on countless occasions.
The cost of developing such a trust is generally quite modest, and is generally regained in only two to four months of continued public benefits which often then last a lifetime.
Read the answers to the frequently asked questions below. We look forward to discussing your case in detail and helping you plan for the future.
Learn more about special needs trusts from Pennsylvania, Delaware, and Washington, D.C. area estate planning attorneys
Consult PA, DE, and Washington, D.C. area special education, estate planning and disability lawyers at McAndrews Law Offices at 610.648.9300 or contact us online to schedule an appointment.
- When should a special needs trust be considered in litigation matters?
- What is the least amount of recovery for which a special needs trust should be considered?
- Who should be the trustee of a special needs trust?
- Are special needs trusts simply a “loophole” that has recently been discovered in the law?
1. When should a special needs trust be considered in litigation matters?
A special needs trust should be considered if you or a loved one is receiving public benefits, including Medical Assistance (MA), Supplemental Security Income (SSI) or mental health or intellectual disability benefits, and may come into monies from any source because having more than $2,000.00 in your own name could disqualify you for your benefits. The monies can come from any source, such as a personal injury settlement, inheritance or an award of past benefits for SSI or other insurance programs.
Different types of special needs trusts exist for these different scenarios, and our trust attorneys can advise you as to the correct trust for your situation.
2. What is the least amount of recovery for which a special needs trust should be considered?
Except in extremely small recoveries, there is virtually no reason to fail to consider the use of a special needs trust to protect valuable government entitlements of disabled persons. In certain cases involving a smaller recovery, you may be able to use a variety of spend-down techniques to purchase nonliquid assets that are excluded from consideration for MA and SSI eligibility.
3. Who should be the trustee of a special needs trust?
Selecting a trustee is a very important decision, as improper management or distributions from a special needs trust can result in the loss of essential Medical Assistance and Social Security benefits, and even worse, it can cause a substantial Social Security overpayment. The choice of trustee depends upon the global circumstances of the disabled beneficiary, including factors such as his age, disability, the source and amount of monies funding the trust and the availability of family supports.
Depending upon the circumstances of the case, a trustee of a special needs trust may either be a corporate fiduciary, such as a bank or trust company, or an individual. Where the injured party receiving a personal injury settlement is a minor or an incapacitated person, then a corporate fiduciary generally must be used. A corporate fiduciary might also be used in cases where the trust will be funded with a substantial amount or where the disabled beneficiary does not have a trusted and responsible family member to serve as trustee.
In circumstances where an individual, non-corporate trustee is utilized, it is essential that the person selected will (1) manage the trust corps proudly, (2) make only lawful and appropriate distributions to the disabled beneficiary and (3) maintain accurate records to allow for periodic reporting to government agencies as necessary (especially at the termination of the trust). Therefore, a well-organized individual with a basic and fundamental understanding of financial transactions should be selected.
4. Are special needs trusts simply a “loophole” that has been recently been discovered in the law?
In 1993, Congress explicitly authorized the creation of special needs trusts so that disabled individuals could maintain public benefits and have access to funds to pay for their supplemental needs and a more desirable quality of life.
The trust must meet basic requirements to qualify under the 1993 law. Notably, the state has the first lien on the residue of the trust upon the disabled beneficiary’s death to recover medical assistance paid during the beneficiary’s lifetime. Only medical assistance required by the state’s estate recovery plan need be reimbursed. However, medical assistance liens relating to injuries of the disabled person that resulted in the litigation must be satisfied prior to funding the special needs trust.