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Article VI "Supplemental Needs Trust for a Disabled Person"

Planning for a disabled individual presents a unique challenge. Many disabled persons receive government benefits such as Medicaid or Supplemental Social Security (SSI). If a parent or grandparent leaves all or a portion their estate outright to someone who is qualified to receive government funds, the gift or bequest will make the child or grandchild ineligible to receive government benefits. Thus, your child or grandchild will not receive any advantages from your bequest. A Supplemental Needs Trust is a way to give an inheritance (or gift) to a disabled person receiving government benefits without affecting the disabled person's eligibility for governmental assistance. A Supplemental Needs Trust will pay for items that are not covered by a government program. Depending on the needs of the disabled individual, the supplemental needs trust could pay for such items as hair cuts, automobiles, televisions, computers and vacations. A supplemental needs trust is used to make the disabled person's life more comfortable. At the disabled person's death, the remainder of the trust can be distributed in any manner the creator of the trust desires.

If the disabled person receives assets due to a malpractice or negligence lawsuit, which otherwise may affect his eligibility to receive government benefits, such as Medicaid or SSI and is under the age of 65, he or she can set up a Supplemental Needs Trust with the settlement funds. Such a trust is known as a "pay-back" trust because at the disabled person's death, the government must be paid back for Medicaid disbursements made on behalf of the individual. However, during the person's lifetime, the trust can supplement government funds received by the individual in much the same way a trust created by another person can.

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