Alabama Family Trust does not provide legal advice regarding whether you should use a supplemental needs trust in a particular situation; however, we will assist you in establishing the trust for your client. We are willing to appear in court to answer any questions a judge may have regarding the the trust and the way the trust operates at the time of establishing the trust. The trust documents are on our website for your convenience.
We also have a checklist to assist you in making sure you have everything necessary to create the trust. If you have any questions while preparing the documents, please call us. We are also happy to look at the trust documents in advance to guide you in properly preparing them.
For Plaintiff Attorneys
If your client is disabled and about to receive a legal settlement or judgment, you need to consider a supplemental needs trust. A supplemental needs trust can hold the client’s settlement or judgment so that the client is financially eligible to continue receiving government benefits such as SSI and Medicaid. If the client is not currently receiving SSI and Medicaid but would be eligible if not for the settlement or judgment, a supplemental needs trust can hold the assets so the client can obtain government benefits.
For Guardian Ad Litems and Probate Attorneys
If you are the Guardian ad litem, you need to be ready to suggest a supplemental needs trust so the ward can receive (or continue to receive) government benefits such as SSI and Medicaid even with these situations:
- has assets
- is receiving an inheritance
- is about to receive monetary gifts from family or friends
- is receiving a legal settlement or judgment
- is about to receive money from a previously non-countable resource (such as money from the sale of a home)
If you are the probate attorney representing someone other than the ward, you also need to be aware of supplemental needs trusts and their use in Guardianship and Conservatorship cases, or in administering an estate when a beneficiary is a person with a disability.
For Estate Planning and Elder Law Attorneys
Alabama Family Trust can hold and administer first-party and third-party trusts. Our pooled trust is frequently named as the Trustee to administer supplemental needs trusts for parents or family members preparing estate plans for loved ones with disabilities.
A pooled trust such as Alabama Family Trust is the only type of Trustee that can hold a special needs trust established for a disabled individual age 65 and older.
For Family Law Attorneys
Alimony for ex-spouses with disabilities may be placed in a supplemental needs trust so the ex-spouse can receive any government benefits for which he or she might otherwise be eligible. This arrangement allows an ex-spouse to receive important benefits such as SSI and Medicaid while still receiving the additional support from the alimony.
Child support for a child with a disability may be placed in a supplemental needs trust. While the receipt of benefits will still depend on parental income, placing the child support in trust may enable a child to be eligible for benefits if parental income is limited.
Important Facts to Consider
- Using a Durable Power of Attorney: If the agent under an Alabama durable power of attorney is executing the trust and the power of attorney was executed on or after January 1, 2012, the power of attorney must include specific language that gives the agent the power to execute a trust on behalf of the principal of the power of attorney. Language that generally gives the agent the power to execute an inter vivos trust or that specifically gives the agent the power to execute a special needs trust is acceptable.
- Limited Conservatorships (One Time Transaction): When creating a first-party trust, if the individual does not have capacity to sign the trust; or, does not have an agent named in a proper durable power of attorney, the attorney can petition the probate court for a limited conservatorship asking the court to authorize a conservator to perform the one-time act of creating the trust. Code §26-2A-137
- First-Party Trusts: must be irrevocable and must contain a pay-back provision to any Medicaid agency, in any state or the District of Columbia, that has paid benefits for the disabled beneficiary.
Comments regarding special forms of Medicaid
Some individuals receive forms of Medicaid called:
- Qualified Medicare Beneficiary (QMB)
- Specific Low-Income Medicare Beneficiary (SLMB)
- Qualified Individual (QI) Medicaid benefits.
In the State of Alabama, Medicaid only considers the Beneficiary’s income to determine eligibility for these programs and does not consider other assets. Additionally, Alabama Medicaid should not pursue estate recovery to recoup the QMB, SLMB, or QI benefits at the Beneficiary’s death. However, Alabama Medicaid will seek to recover any benefits that have been paid for the Beneficiary from a special needs trust account at the time of death. In some cases, the benefits of using a supplemental needs trust may outweigh the possibility that Medicaid can collect for past QMB, SLMB, or QI benefits. As we cannot provide legal advice, we cannot advise you if a supplemental needs trust will benefit a client who receives QMB, SLMB, or QI benefits.
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