Special Needs Trusts Address Long-Term Disabilities

On August 19, 2009, Michael A. Cassidy, Esq., of Tucker Arensberg, P.C., posted an entry on the Med Law Blog, entitled "Special-needs trusts can provide for disabled children."

He highlighted an article of the same title published the day before by the Pittsburgh Post-Gazette.

I repost it, since the topic is so important to families of disabled or handicapped children, and the article is excellent.

The Pittsburgh Post Gazette recently ran an article entitled "Special-needs trusts can provide for disabled children".

This article highlights an essential planning tool for individuals with special needs and their loved ones, but also the complexity of such planning. Special needs planning requires a strong estate planning foundation in addition to a working knowledge of public benefits eligibility rules.

The article notes that "anyone receiving Social Security disability benefits cannot have more than $2,000 in his own name without losing the benefits." An often misunderstood concept is the distinction between Social Security Disability Insurance (SSDI) benefits and Supplemental Security Income (SSI) benefits.

Both SSDI and SSI require that a recipient be "disabled" as defined under the Social Security Act. However, SSDI is an entitlement benefit based an individual's earnings history whereas SSI is a means-tested benefit. SSDI, therefore, requires no inquiry into an applicant's countable resources where as SSI generally applies a $2,000 resource limit.

In Pennsylvania, an individual who qualifies for SSI typically automatically receives Medical Assistance (Medicaid) benefits, which is often the most sought after of the means-tested public benefits.

For children with disabilities, Medical Assistance can serve as a primary or secondary insurance. If used as a secondary insurance, Medical Assistance often provides vital care rarely covered by employer-provided insurance, such as behavioral health wraparound services, in-home nursing/therapies/personal care, diapers, nutritional supplements and transportation. Children in Pennsylvania may qualify for Medical Assistance regardless of their eligibility for SSI and, in certain instances, their parents income.

I am aware from my involvement in past and current cases preparing, or seeking court approval of, special needs trusts, that the warning in the article should be heeded:

But recent rule changes have made the proper drafting of these trusts more important than ever. Several challenges to improperly worded trusts have caused government benefits to be denied to trust beneficiaries. * * *