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Special Needs Trusts by Timothy Davenport: Home

Timothy J Davenport

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Ulysses Jaen
1025 Commons Circle, Naples,
Florida 34119-1376
(239)687-5501 Tel.

Introduction to Special Needs Trusts

"A Supplemental Needs Trust enables a person under a physical or mental disability, or an individual with a chronic or acquired illness, to have, held in Trust for his or her benefit, an unlimited amount of assets.  In a properly-drafted Supplemental Needs Trust, those assets are not considered countable assets for purposes of qualification for certain governmental benefits.

 Such benefits may include Supplemental Security Income (SSI), Medicaid, vocational rehabilitation, subsidized housing, and other benefits based upon need. For purposes of a Supplemental Needs Trust, an individual is considered impoverished if his or her personal assets are less than $2,000.00.

A Supplemental Needs Trust provides for supplemental and extra care over and above that which the government provides.

Supplemental Needs Trusts had been used for years based upon case law. In 1993, Congress created an exception under the amendments to the Omnibus Budget and Reconciliation Act (OBRA-93) which specifically authorized the use of Supplemental Needs Trusts for the benefit of individuals who are under the age of 65 years and disabled according to Social Security standards. The Social Security Operations Manual authorizes the use of Supplemental Needs Trusts to hold non-countable assets.

Each Supplemental Needs Trust is its own "entity" with its own Federal Identification Number (Employer Identification Number) issued by the Internal Revenue Service. The Trust is not registered under either the Grantor's or the Beneficiary's Social Security Numbers.

According to Congress a Supplemental Needs Trust must be irrevocable. A properly-drafted Trust will include provisions for Trust termination or dissolution under certain circumstances, and will include explicit directions for amendment when necessary." -

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Advocacy Groups and Service Providers

Children with special needs require more than just financial support.  The following are some useful links that may help you better understand your child and the disabilities that they have.  A better understanding of the challenges they face can help you to be better prepared to meet those challenges with them and plan for their successful future.



What kind of special needs trusts are there?

  • Self funded Special Needs Trust D(4)(a) - Funded by the assets of the beneficiary....
    •    Must be created by a parent, Grandparent or Cour order
    •    Must Contain a granting clause that gives the remainder to the State on the death of the beneficiary
  • Third Party Special Needs Trust D(4)(c?) - Funded by the assets of a third party, not the beneficiary
    • Remainder of the estate does not need to go back to the state.  It can be distributed according to the wishes of the third party or the laws of testate succession.
  • Pooled Special Needs Trusts
    • pools the assets of the beneficiary with others
    • Mainly so beneficiaries of smaller trust amounts can still benefit from the trust returns. 
    • Trust proceeds are distributed to the Trust pool on the death of the Beneficiary

Who Can Create a Special Needs Trust?

      Anyone can create an SNT; however, the entity funding the trust can have a large impact on how the trust is treated for public benefit eligibility purposes.  You must know what kind of trust you need and who the Settlor and Beneficiary are to ensure you are following the correct requirements.

When to use a Self Settled Special Needs Trust

      Self-Settled SNTs are most helpful when someone already receiving Medicaid or Social Security Benefits receives a personal injury settlements, including structured settlement payments, and inheritance, or any large sum on money that may effect their Program eligibility.

When to Use Third-Party Special Needs Trusts

A. Contingent third-party SNT if beneficiary becomes disabled as part of parents’ or grandparents’ estate plan. Common situations include:

1. Parents have a young developmentally disabled or mentally ill child, the extent of whose disabilities may not be known for years.

2. Child suffers from a chronic disease or mental condition which is not currently severe enough for the child to be considered disabled, but which could result in total disability in the future.

B. Irrevocable Life Insurance Trust.

1. Life insurance proceeds will provide for the supplemental needs of the beneficiary following the insured’s death.

(Davis on Special Needs)

Government Resources


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