Shalloway and Shalloway, P.A.

Who Needs a Self-Settled (d4a) Special Needs Trust?

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A Self-Settled (d4a) Special Needs Trust is an important tool if you are a disabled Individual who is over the required asset cap for a given government benefit and wish to qualify for government benefits including but not limited to; SSI, SSDI, Food Stamps, Medicaid, or Section 8 Housing. The “d4A” designation comes from its place in federal law: 42 U.S.C. §1396p(d)(4)(A).

A d4A trust is not available to anyone; strict eligibility requirements must be met. If an individual is under age 65, is legally deemed to be disabled, and is currently receiving needs-based benefits (e.g. SSI, Medicaid), then that individual is likely eligible for a d4A trust. Even if you are a disabled person who does not wish to obtain or remain on government benefits, and there is no reason to transfer funds into a Self-Settled Special Needs Trust, you may still want to pro-actively create a Self-Settled Special Needs Trust and not fund it with your monies until you wish to seek government benefits.

A Self-Settled Special Needs Trust is only funded by the disabled person’s monies, which are often settlement proceeds. The reason for this is because any monies left in the Self-Settled Special Needs Trust, upon the death of the disabled individual, is subject to Medicaid payback up to the amount that Medicaid paid out. If monies other than the disabled individuals own monies are placed into the trust, they would then be unduly subject to such payback.

In order to create a Self-Settled Special Needs Trust, the disabled person must have monies or must expect to receive monies from someone in the near future. A Self-Settled Special Needs Trust can be created before the disabled person actually receives funds from a settlement, inheritance or other manner, as a means pro-actively protecting pre-existing government benefits or ensuring approval of government benefits.

However, if there are people who wish to plan to give the disabled person monies in the future via a Will or other Estate Planning document, a Self-Settled Special Needs Trust is not the kind of trust that should be created. Instead, a Third-Party Special Needs Trust would be more appropriate. 

Please contact our office for more information regarding Self-Settled Special Needs Trusts and Third-Party Special Needs Trusts.

Shalloway & Shalloway, P.A., is located in West Palm Beach, FL and serves clients in Palm Beach, Broward, Dade, Okeechobee, Martin and St. Lucie Counties.

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