Protecting Benefits While Planning for the Future
Families with disabled loved ones often face difficult decisions when it comes to financial planning. One of the most effective tools for preserving eligibility for government benefits like Medicaid and Supplemental Security Income (SSI) is the special needs trust.
At Gerhard & Gerhard, P.C., we help families in Montgomery County and surrounding areas understand the difference between first-party and third-party special needs trusts, and how each can be used to protect a disabled individual’s future.
What Is a Special Needs Trust?
A special needs trust (SNT) is a legal arrangement that allows a disabled person to have funds available for his or her supplemental needs without losing access to vital government means-tested benefits like Medicaid and SSI. These trusts are designed to supplement these government benefits, and can pay for expenses such as:
- Transportation
- Education
- Therapies
- Personal care items
- Entertainment and travel
There are ways for a special need trust to pay for important expenses that can help maintain a good standard of living for a disabled person in the community. The trustee of the special needs trust may pay for the disabled person’s rent or, if there is enough money, the trust can own a home for the disabled person’s benefit. Depending on your wishes, it is possible to draft the trust in a manner to pay for shelter expenses. Although shelter expenses can reduce certain government benefits, the special needs trust can be drafted to give the trustee flexibility to allow a slight reduction in government benefits for a much greater standard of living for the disabled person. When creating the special needs trust, it is crucial to give the trustee the flexibility and discretion to enhance the life of the disabled beneficiary while maximizing the receipt of means-tested government benefits.
First-Party Special Needs Trusts
A first-party SNT is funded with the disabled individual’s own assets. Common sources include:
- Personal injury settlements
- Inheritances received directly
- Savings or other personal assets
Key Features:
- Can be established by the disabled individual, their parent, grandparent, legal guardian, or court
- Must be created before the beneficiary attains age 65
- Must include a Medicaid payback provision
Third-Party Special Needs Trusts
A third-party SNT is funded by someone other than the disabled individual—typically a parent, grandparent, or other family member. These trusts are often created as part of an estate plan and can be funded during the donor’s lifetime or upon their death.
Key Features:
- No Medicaid payback requirement
- Can be much more flexible in design
- Can permit distributions to others, if desired
- Ideal for proactive planning by family members
- Funds not spent during the disabled individual’s lifetime can pass on to other remainder beneficiaries of your choosing, such as other family members or a charity.
Meet Anthony L. Marone – Special Needs Trust Attorney
At Gerhard & Gerhard, P.C., attorney Anthony L. Marone focuses his practice on special needs trusts and government benefits planning, including Medicaid and SSI. Whether you are a disabled individual or a family member seeking to support a loved one, Anthony provides knowledgeable, compassionate guidance tailored to your situation.
Serving clients throughout Montgomery County, Pennsylvania, Anthony helps families:
- Establish first-party and third-party special needs trusts
- Navigate Medicaid and SSI eligibility rules
- Plan for long-term financial security
- Modify special needs trusts that were prepared incorrectly or which require changes
Schedule a Consultation
If you or a loved one needs help with special needs planning, we invite you to contact our office in Jenkintown, PA. At Gerhard & Gerhard, P.C., we’re committed to helping families protect their loved ones and preserve their futures.
