IM-80 August 2, 2021; IM-40 April 25, 2017; IM-32 March 12, 2013
Special Needs Trusts (SNT) established under Section 1917(d) of the Social Security Act (42 U.S.C. 1396p(d)) are not counted as available resources to the individual provided the assets are held in the name of the trust. The assets of the individual may be used to establish the trust.
42 U.S.C. 1396p(d) includes the following rules for how SNTs are establish:
- Trusts established by a parent, grandparent, guardian, representative payee or court for the benefit of an individual who is disabled, under age 65 and, using the individual’s own funds. (42 U.S.C. 1396p(d)(4)(A))
- Trusts established by a disabled individual, parent, grandparent, guardian, representative payee or court for the disabled individual using the individual’s own funds, where the trust is made up of pooled funds (pooled special needs trusts) and managed by a non-profit organization for the sole benefit of each individual included in the trust. Pooled special needs trust co-mingle resources from individual disabled beneficiaries for investment but account for them separately. (42 U.S.C. 1396p(d)(4)(C))
- Trusts established by the disabled individual, under age 65, on or after December 13, 2016. The 21st Century Cures Act Section 5007 allows individuals to establish their own special needs trusts and qualify for the exception to resources under Section 1917(d)(4)(A) of the Social Security act. This provision does not apply to trusts created prior to December 13, 2016.
In the above instances, the trust must provide that the state of Missouri receives any funds remaining in the trust upon the death of the individual, up to the amount equal to the total of MO HealthNet benefits paid on behalf of the individual through the MO HealthNet program.
Third-Party Trusts are established with resources provided by someone other than the beneficiary of the trust or their spouse. “Tidrow” trusts and some “supplemental needs trusts” are third-party trusts. The participant is the beneficiary, and a third party is often (but not always) the trustee. The trustee usually has discretion to distribute trust assets to the beneficiary, in accordance with guidance from the grantor.
NOTE: Grantors to third-party trusts (the people who gave money to fund the trust) may retain the right to reclaim all or part of the contributions to the third party trust during their lifetime. When the grantor’s contribution is revocable, the amount of the contribution remaining in the trust is an available resource to the grantor if he/she is a participant.
EXAMPLE: Mr. S has a disabled grandchild. Mr. S contributes $85,000 to establish a trust account to supplement the care of his grandchild. Mr. S made his contribution revocable. Later, Mr. S later applies for MO HealthNet. Staff must determine the amount in the grandchild’s trust account available to Mr. S., to be counted as an available resource to Mr. S.
NOTE: Parents can give money to a blind or disabled child (this does not include stepchildren) without restrictions on the age of the child and this is not considered a transfer of property.
Related and unrelated individuals may transfer assets to a trust established for the sole benefit of a disabled individual under age 65 and this is not considered a transfer of property. See 1040.000.00 Transfers of Property.