First Party SNT

I’m receiving a personal injury settlement,

but need Medicaid.

Can a Special Needs Trust help?

There are two common situations in which the use of a Nevada self-settled special needs trust may be beneficial.  One is when you’ve been in an accident and there is a personal injury settlement waiting to be paid.  But because of the nature of the injury you are now in need of government benefits, such as Medicaid.  If you receive the settlement proceeds, the government benefits may be lost.  What can you do?

The other common situation is one in which a disabled individual is already receiving government benefits such as Medicaid.  Then a parent dies leaving an inheritance to the disabled child without having set up the proper Third-Party Special Needs Trust.  What can be done to prevent the child from losing the government assistance?

This is where a Special Needs Trust (“SNT”) that is self-settled can come into play.  This is also referred to as a “First-Party Special Needs Trust”.  An SNT is used to allow the beneficiary to qualify for certain means-tested government benefits like Medicaid or Supplemental Security Income (“SSI”).

For a First-Party SNT to work, there are very strict requirements that must be met.  If you meet the requirements, Nevada will not look at the trust assets when considering whether the applicant qualifies for Medicaid.

Use a SNT to Preserve Benefits
Use a SNT to Preserve Benefits

So what are some the requirements?  The SNT must be set up during life and be irrevocable.  The SNT may be established by the applicant, if they have the appropriate capacity, or by the applicant’s parent, grandparent, legal guardian, or a court.  Oddly,  neither the applicant’s spouse nor the applicant’s child can set up the special needs trust. Once set up, the applicant’s assets go into the trust.

Also, only the applicant can be the primary beneficiary of the SNT.  The trust can name a remainder beneficiary to receive the assets upon the applicant’s death and after the state has been reimbursed.

In making distributions, even though the Trustee has discretion over the use of trust principal and income, there are specific restrictions that allow the Trustee to only use trust assets for the beneficiary in such a way as to not disqualify the beneficiary from government benefits.

In order to properly establish a First-Party Special Needs Trust in Nevada, contact our office for a consultation.

Call: (702) 894-4110