Planning for the First-Party Pooled Special Needs Trust

Individuals living with special needs who receive funds through an inheritance, Social Security back payment or personal injury settlement should consider the following:

  • Does the individual with special needs depend on SSI and Medicaid benefits now or will there be a need to apply in the future?
  • Due to the nature of the disability, could the individual benefit from a Trust Administrator?

If an individual with special needs receives funds directly, the funds could disqualify the Beneficiary from receiving government entitlement benefits such as SSI and Medicaid because of the $2,000 asset limit.  Once benefits are lost, the funds will be used to pay expenses that otherwise could have been covered by SSI and Medicaid benefits.  By establishing a First-Party Pooled Special Needs Trust with Commonwealth Community Trust (CCT), SSI and Medicaid benefits are not jeopardized.

Due to the nature of the individual’s disability, the need for a trust administrator may also be beneficial.  The First-Party Pooled Special Needs Trust ensures that the funds are used for the sole benefit of the Beneficiary, provides professional management and investment of funds, and can be used to enrich the quality of life for the Beneficiary.

The First-Party Pooled Special Needs Trust is authorized by the Omnibus Budget Reconciliation Act and is self-funded by the person living with special needs.  This type of special needs trust is sometimes called a self-settled special needs trust or Medicaid payback trust for Beneficiaries who receive Medicaid.  (See What happens to the remainder when the Beneficiary passes away for Medicaid recipients?)

CCT can work closely with an attorney who is handling the Beneficiary’s settlement, inheritance, or other source of funds to coordinate the enrollment process.

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