If you have a child or another dependable family member with special needs, you may worry about their future and look for ways to provide for your loved one even after you are gone. Unfortunately, leaving assets directly to your family member may disqualify them from government benefits like Medicaid and SSI.

At Commonwealth Life & Legacy Counsel, our legal team can help you secure your loved one’s future and preserve their eligibility for public benefits by setting up a special needs trust (SNT). Call us at 434.589.2958 for a free consultation with a trust and estate attorney in Troy, VA.

Types of Special Needs Trusts in Virginia

Special needs trusts fall under three main categories: third-party SNTs, self-settled trusts (d4A trusts), and pooled trusts.

Third-Party SNTs

The disabled person’s parent or relative can establish a third-party SNT as a living trust or under their will.

A third-party SNT:

• Can be revocable or irrevocable. A revocable trust still counts as part of the trust creator’s estate for tax and debt purposes.
• Receives funds from the trust creator and never from the beneficiary
• Cannot compel the trustee to distribute funds to the beneficiary. This provision protects trust assets from Medicaid claims.

Self-Settled Trusts (d4A)

A self-settled trust, or d4A trust, uses the beneficiary’s own funds and thus may disqualify the beneficiary for public benefits. To preserve the beneficiary’s eligibility for Medicaid and SSI, the d4A trust must:

• Date from before the beneficiary turns 65
• Exclusively support the disabled beneficiary
• Use any remaining assets to reimburse the State for Medicaid payments after the beneficiary’s death

Pooled Trusts

Pooled trusts are trusts that nonprofit associations can establish and manage. Disabled beneficiaries can transfer their assets to a pooled trust and preserve their public benefits if:

• The trust maintains separate accounts for all beneficiaries (but may pool accounts for management and investment)
• Following the beneficiary’s death, any remaining assets the trust doesn’t keep pass to the State as repayment for Medicaid
• The beneficiary counts as a disabled person under 42 U.S.C. §1382c(a)(3)

Virginia Special Needs Trust Requirements

All SNTs in Virginia need to comply with certain requirements, including:

• The trustee (trust manager) must be someone other than the special needs beneficiary, such as a family member, an association, or a professional trustee. The agreement should also allow for successor trustees in case the original trustee dies or relinquishes their role.
• Any distributions from the trust will take place solely at the trustee’s discretion.
• All fund distributions must preserve the beneficiary’s eligibility for public benefits.
• The trust agreement must include instructions for the distribution of any remaining trust assets after the beneficiary’s death.

Commonwealth Life & Legacy Counsel: Protect Your Loved Ones With a Special Needs Trust

Gain peace of mind knowing that you have provided for your most vulnerable family members. Call us at Commonwealth Life & Legacy Counsel to learn about special needs trust options in Virginia. Our experienced estate and trust lawyers will help you decide which type of trust answers your family’s needs.

For a free consultation in Troy, VA, and across central Virginia, call our team at 434.589.2958 or contact us online.