In Alabama, there are countless families with disabled adult family members – loved ones between the ages of 18 and 65 who need help leading a healthy and fulfilling life.
To provide help and support in a cost-effective manner, the state of Alabama has established the means to create a supplemental needs trust for disabled adults. This type of trust is created for the purpose of providing care for a loved one with a disability by not only providing funds for care but also offering additional benefits when it comes to taxes and protection for the disabled adult.
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What are the requirements to establish a supplemental needs trust for a disabled adult?
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The first requirement to establish a supplemental needs trust for a disabled adult is that the individual must be qualified as disabled. If the individual receives assistance from Social Security or Medicaid to help provide for medical and living expenses, he or she qualifies for this type of trust.
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The second requirement is that the trust must be irrevocable, meaning that the trustor never has the power to revoke or cancel the trust or remove assets placed into the trust. Income tax must also be paid on assets that are deposited into the trust fund. Additionally, a trustee is placed in charge of all distributions and supervision of the trust.
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The third requirement is that only the disabled adult can receive benefits from the trust. In other words, the funds deposited into and accrued by the trust can only be used for the benefit of the disabled adult, ensuring that they receive full benefits from their trust.
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The fourth requirement is that payments from the trust can only be used for things that government benefits will not pay (for supplemental needs).
In addition to these legal requirements, the Alabama Family Trust has criteria that must be met in order to establish a trust account for an individual.
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If a disabled adult has a Supplemental Needs Trust, can they still receive SSI and Medicaid?
Yes. Supplemental Needs Trusts are designed to help a Beneficiary achieve or maintain financial eligibility to receive means-tested government benefits like SSI and Medicaid. The funds in trust can then be used to help pay for items not covered by government benefits.
For legal advice about your specific situation, Alabama Family Trust recommends you work with a qualified attorney.
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Are there any limitations on how funds in a Supplemental Needs Trust be used?
Funds in a Supplemental Needs Trust can only be used to purchase items that are for the sole benefit of the trust Beneficiary. Another common limitation is that trust funds cannot be used for food or housing, which are considered basic needs according to the law. Here is a list of common items that can be paid for using Supplemental Needs Trust Funds. using Supplemental Needs Trust funds.
