Missouri Self-Settled Special Needs Trust

A Missouri self-settled special needs trust, also known as a first-party special needs trust or a “(d)(4)(A) trust” (after the subsection of the federal law that authorizes it), is a type of trust designed to hold the assets of an individual with disabilities without disqualifying them from receiving means-tested government benefits like Medicaid and Supplemental Security Income (SSI).

Key Features and Purposes of a Self-settled Special Needs Trust

Beneficiary’s Assets

This type of trust is funded with assets that belong to the individual with disabilities, typically arising from an inheritance, a personal injury settlement, or direct earnings

Eligibility for Benefits

Many government benefits have strict limits on the assets and income beneficiaries can hold. A self-settled special needs trust allows the beneficiary to maintain eligibility for these benefits by not counting the assets in the trust towards these limits.

Use of Trust Funds

The trust funds are used to pay for expenses that enhance the beneficiary’s quality of life beyond what government benefits cover. These can include education, transportation, personal care, and recreational activities, among other things.

Establishment and Management

The trust must be established by a parent, grandparent, or legal guardian of the individual or by a court and must benefit someone under 65 years old at the time it is created. Individuals with disabilities cannot establish the trust themselves but can fund it with their assets.

Payback Provision

One key feature of the self-settled special needs trust is the “payback” provision. Upon the death of the beneficiary, any funds remaining in the trust must be used to reimburse the state for Medicaid benefits received by the beneficiary during their lifetime. Any funds left after reimbursing the state can go to other heirs or beneficiaries named in the trust.

Legal Guidance and Setup

Setting up a self-settled special needs trust involves navigating complex legal and regulatory requirements. To ensure that the trust complies with federal and Missouri state law, it’s typically necessary to engage an attorney who specializes in special needs planning.

Conclusion

A self-settled special needs trust is a crucial tool for individuals with disabilities who receive significant assets but need to preserve their eligibility for essential government benefits. It offers financial security without risking the loss of benefit support.

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