For many individuals with autism, government benefits provide essential services and financial support. Parents’ assets are not typically evaluated when establishing a child’s eligibility for means-tested public benefits, but upon reaching adulthood, the individual’s own finances become a consideration. Major public programs with strict standards regarding beneficiary-held assets include:
• Medicaid coverage of basic medical care
• Medicaid “waiver” services such as employment assistance, day habilitation, residential options and in-home supports
• Supplemental Security Income (SSI), which provides funds for food and shelter
• Food stamps
• Housing subsidies
Personal injury settlements, inheritances or gifts can easily disqualify an individual with autism for these important programs. But if those funds are held by a special needs trust (SNT), they aren’t “owned” by the individual, and eligibility for government benefits is not affected. Such protected assets can then be used for expenses not covered by public programs—a service dog, certain therapies, a computer or vacation.
The SNT is managed by one or more trustees, who should be chosen with care, since their responsibilities are both numerous and long-term. In addition to being adept at managing investments, they should be versed in the intricacies of public benefits and understand the many rules governing distributions. Trustees can be family members, friends, financial institutions or special needs attorneys.
There are three types of SNTs, subject to differing regulations:
• A first party, or self-settled, SNT is created with assets belonging to the individual with autism, who is the “beneficiary.” Such funds typically consist of a personal injury settlement or inheritance. The person must be under 65 at the time that the trust is established and once created, the SNT cannot be changed, it is “irrevocable.” Funds remaining in the trust at the beneficiary’s death must be used to reimburse Medicaid for services to that individual before they can be distributed to anyone else.
• A third party SNT holds assets provided by someone other than the beneficiary. It can be created and funded during the life of the originator (“inter vivos”), or as part of a last will and testament (“testamentary”). It can be either revocable or irrevocable, is not subject to Medicaid payback, and can designate “remainder” beneficiaries to receive funds remaining upon the primary beneficiary’s death.
• A pooled SNT is often a practical alternative for small estates. Sub-accounts belonging to many beneficiaries are managed as a single entity, usually by nonprofit corporations that call upon the experience of social workers, money managers and special needs attorneys. Since many financial institutions do not handle small SNTs, or charge fees that are not cost-effective for modest trusts, pooled trusts can give families access to highly skilled trustees. Funds remaining at the beneficiary’s death are typically divided between Medicaid and the nonprofit.
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