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First Party Special Needs Trusts (aka (d)(4)(A) SNT or Pooled SNT)

A person who is disabled and receiving needs-based public benefits requires special planning when he or she receives a settlement or judgment. Failing to plan can lead to great hardship for the client and may lead to a malpractice claim against the plaintiff 's attorney. Primarily, this planning is done by transferring the litigation recovery to a first party Special Needs Trust (SNT). This type of trust allows a person with a disability to use the litigation recovery for his or her future needs while preserving eligibility for needs-based public benefits.

First-party SNTs are statutorily created “safe harbor” trusts. Therefore, every first-party SNT must strictly comply with a myriad of federal, state, administrative and judicial rules and regulations defining them. Even small changes in a plaintiff 's fact pattern (e.g., plaintiff 's age, legal capacity or amount of recovery) can lead to a very different planning solution. So, it's important for your attorney to understand the law in this area and how different factual situations will change the appropriate plan. We can help navigate through these difficult waters to make sure that your loved one receives the best possible plan.

A first-party SNT is a trust authorized by federal law. The purpose of a SNT is to allow an individual with a disability to receive the benefit of their personal injury award while preserving their right to receive their essential “needs-based” public benefits. Primarily, the benefits at issue are Medi-Cal and Supplemental Security Income (SSI). Moreover, the SNT can provide expert money management by a professional money manager and provide appropriate care for the individual with a disability utilizing care managers, if appropriate.

Requirements for Special Needs Trust eligibility include:

The SNT must be funded with assets of the person
The person must be under 65 years of age at the time the SNT is funded
The person must be disabled
The SNT must be for the “sole benefit” of the person with a disability
The SNT must be established by a parent, grandparent, legal guardian, or a Court
Upon the death of the person with a disability, Medi-Cal must be repaid for benefits paid during the individual's lifetime

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Santa Barbara Estate Planning & Elder Law is committed to answering your questions about Elder Law, Medi-Cal Planning, VA Benefits, Special Needs Planning, Estate Planning, Probate/Trust Administration, Trademarks, and Kids Emergency Planning law issues in California.

We'll gladly discuss your case with you at your convenience. Contact us today to schedule an appointment.

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