A special needs trust is created to prevent a person who received government benefits due to a disability from losing the eligibility to continue receiving those benefits due to owning assets in excess of the qualifying requirements. A D4C Pooled Special Needs Trust allows a nonprofit organization to “pool” the funds from several beneficiaries under one Master Trust Document pre-approved by Social Security and Medicaid. The purpose behind pooling these funds is to invest the assets for everyone’s ultimate benefit.
Who May Join?
Any person of any age with a disability:
- Who is currently receiving public benefits or may receive benefits in the future, AND
- Has received a lump sum of money (usually through either an inheritance or a personal injury settlement) AND
- Would like the benefit of having those funds invested and managed by a nonprofit organization.
The assets in the D4C pooled trust must be used in a supplemental manner. The purpose is not to replace government benefits but to provide supplementary income. A trust that is deemed special needs cannot provide food or shelter, that includes basic utilities such as gas, water and electricity. Utilities such as telephone and cable service are not considered basic and therefore can be paid out of the SNT.
All purchases made with SNT assets must be only for the beneficiary. For example, the assets may be used to purchase and maintain a vehicle, but only if it is used for the beneficiary. Personal use by the beneficiary is required.
Travel expenses, including a companion, can be paid out of a SNT, which may include travel, accommodation and meals.
Trustee Discretion
Sole and absolute discretion for distributions made from the SNT to the beneficiary reside solely with the trustee. The beneficiary cannot compel distribution from the trust. The beneficiary can request a distribution, but the trustee must make the decision. The beneficiary should seek prior approval before making any purchases with the anticipation of the debt being paid by the trustee. The trustee must make payments directly for all purchases and cannot distribute cash to the beneficiary.
For more information on the various types of special needs trusts, contact the experienced attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com.
