Estate planning
Special needs trusts
Choose the trust based on whose assets will fund it and how it will take effect. The source of funds, the beneficiary’s control, the terms of the trust and the trustee’s actual payments can each affect benefits.
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- Third-party trust
A parent, relative or another person contributes assets that have not belonged to the beneficiary.
- First-party trust
The beneficiary’s own funds are involved. Review disability, establishment authority, age, funding and repayment requirements.
- Pooled trust joinder
A nonprofit administers a pooled master trust with separate beneficiary accounts. Check the actual master agreement, permitted retention and the proposed funding.
- Testamentary trust
The arrangement takes effect under a will. Coordinate it with the will, probate and execution rules that apply.
What happens if the trustee buys groceries?
For assistance received on or after September 30, 2024, Social Security excludes groceries or meals provided in kind from federal SSI in-kind support and maintenance. A trustee can pay a grocery store for a food delivery without the value of the food counting as shelter. The date of receipt controls even if the trust was signed earlier.
Cash paid to the beneficiary, including a grocery reimbursement, can be unearned income after applicable exclusions. A card usable for food, shelter or cash can also count. For a restricted card, document where it can be used, what it can buy and whether it can be sold or exchanged for cash.
When can shelter affect SSI?
The one-third rule generally applies when the beneficiary lives in another person’s household for a full calendar month, receives shelter from others there, and the household provides or pays for all their meals. Who supplies meals selects the rule. Their food value is excluded. Under this rule the reduction is one-third of the applicable federal benefit rate.
For other countable shelter, Social Security starts with a presumed maximum of one-third of the applicable federal benefit rate plus $20. A beneficiary may document a lower market value after their contribution or a lower actual payment by someone else. The ceiling and any available income exclusions must be applied to the individual facts.
If trust principal is excluded as a resource and the beneficiary lives in a trust-owned home, document when the trust bought it, how it was financed and which bills it paid. An outright purchase may count in the purchase month. Mortgage payments and shelter operating expenses may count in the months paid. Repairs and accessibility improvements to that property are treated separately. Save the invoices and payment records.
One-third rule · Presumed value and rebuttal · SSA trust-owned housing guidance
Which states may be owed Medicaid reimbursement?
For a first-party Medicaid-exception trust, identify every state that provided medical assistance for the beneficiary. A move, the trustee’s address and the trust’s choice of law do not identify all the payees. For a qualifying pooled trust, apply the master trust’s lawful retention first. Reimburse the states from the funds that remain, up to each state’s verified claim.
At the beneficiary’s death, only specific taxes arising from the death and reasonable costs of winding up the trust can be paid before the states. Document those amounts before paying debts or remainder beneficiaries. Other state-law questions include creation of the trust, court approval, accounting, execution and administration.
Federal Medicaid trust exceptions · SSA payback and permitted expenses
Preview a trust
Examples use fictional parties. Open a sample for the trust type you are considering, then enter your own funding and trustee details in the wizard.