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There are two other types of trusts that may be applicable to families and caregivers of individuals with special needs: the Remainder Trust and Irrevocable Special Needs Payback Trust.
Remainder Trusts
This trust can be established by anyone (known as the settlor) with his/her assests in the name of the special needs individual (SNI) with another individual named as the remainder beneficiary (RB). The RB owns the assets though the settlor funds the trust. There is no cap on the value of the assets that can be placed in the trust.
Trust documents are typically prepared by a lawyer, a bank, or a financial professional. Distribution for the SNI from this trust can only be approved for items not covered by government benefits. The Trustee has sole discretion to approve or disapprove distributions from the trust. There is no recourse to reverse a denial. Upon the death of the SNI, any remaining assets in the trust will pass to the RB.
Irrevocable Special Needs Payback Trust
This trust is also referred to as a "self-settled special needs trust." Only a parent, grandparent, legal guardian or court can establish this trust for the SNI. Assets to fund this trust comes from the settlor and/or from the SNI’s assets.
Costs to establish the trust can range from $2,000 to $4,000 based on the total value of the assets and the complexity of the trust documents.
Distribution for the SNI from this trust can only be approved for items not covered by government benefits. The Trustee has sole discretion to approve or disapprove distributions from the trust. There is no recourse to reverse a denial. Upon the death of the SNI, any remaining trust funds will first be used to reimburse the state for Medicaid paid on the beneficiary’s behalf. The balance minus any outstanding bills will go to the SNI’s estate.
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