Some children have special needs that require extra care and
attention. Often, these children are eligible for benefits so
that they may be properly cared for. Problems may arise if
that child is to recieve money through inheriting it or through
winning a lawsuit, because if they recieve the money, they may
become ineligible for benefits, and then all the money must be
exhausted before they can recieve public benefits once again.
A "Special Needs Trust" is a type of trust where a parent or
other person may place money to increase the child's quality of
life, but without disqualifying the child from recieving the state
or federal benefits.
What are the Requirements for a Special Needs
A Special Needs Trust is often used in situations where a child
inherits money, or the child's disability was caused by accident or
injury and, as a result, the person has recovered funds due to a
lawsuit or insurance settlement.
Federal law requires that the following basic
requirements be met for the establishment of a special needs
- Disabled beneficiary: The trust must be
established for the benefit of a person with a disability.
- Under age 65: The person with a disability
must be under age 65.
- Established by parent, grandparent, legal guardian, or
court: The trust must be established by a parent,
grandparent, legal guardian, or court.
- Payback provision: Upon the death of the
trust beneficiary, the state will receive all amounts remaining in
the trust, up to the amount equal to the dollar amount of medical
assistance paid on behalf of the beneficiary.
Ohio regulations also add the following requirements for
payments from a special needs trust:
- No direct cash payments: The payments cannot
be made directly to the beneficiary. They must be purchased by the
trustee and some courts require that the payments be made directly
to the service being provided.
- Supplemental services: Payments can only be
made for "supplemental services" as defined by the Ohio
What Can the Special Needs Trust Pay
Payments from a special needs trust are to be made only for
"supplemental services." Supplemental services are defined by the
Ohio Administrative Code and are expenditures, items, or services
- are in addition to services provided by government programs;
- do not take the place of services that are otherwise available
without funds from the trust;
- are in addition to basic necessities, such as food, clothing,
shelter, education, and medical care; and
- are in addition to other items provided pursuant to an
Some examples of supplemental services may include:
- travel and vacation
- hobbies and recreational activities
- exercise equipment
- subscriptions to magazines
- stereo system
To summarize, the Ohio Administrative Code states that
supplemental services must be spent on things that "provide dignity,
purpose, optimism, and joy to the beneficiary of the trust."
Is a Special Needs Trust Right for Your
The biggest advantage is that is allows a person with a
disability to retain their eligibility for Medicaid benefits. For
example, although a person might be awarded a substantial amount of
money in a lawsuit, those funds might be quickly depleted if the
person loses their Medicaid benefits that cover nursing hours. The
trust allows the person to use the funds for quality of life while
preserving their medical benefits.
Using a Special Needs Trust gives your child the little "extras"
that make life that much more enjoyable.
To discuss your loved one's needs, contact Golowin Legal