Examples of Personalized Trusts

Medicaid Payback Trusts or Special Needs Trusts
Typically, Medicaid Payback Trusts (also called “Special Needs Trusts”) are funded by assets received from a personal injury settlement, jury award, or inheritance. The beneficiary of a Medicaid Payback Trust must be under 65 when the trust is established, and must meet the definition of disability under the Social Security Act Title II. The trust must include a Medicaid reimbursement provision. Some Special Needs Trusts are established and overseen by a Probate Court; others require no supervision.

Pooled Trusts
When a smaller amount of assets is involved, or when it is in the best interests of the disabled individual for a professional to make decisions about investments and distributions (payments out of the trust), a pooled trust may be advisable. Pooled trusts are created with the beneficiary’s personal assets, and are available in Ohio through the Community Fund Management Foundation in Cleveland, The Disability Foundation in Dayton, SCSA, and others. The pooled trust involves relatively low management fees, but is also less flexible on how distributions may be made from the trust account.

Supplemental Services Trusts
Unlike a Pooled Trust, the Supplemental Services Trust must be created with the assets of another. For instance, this trust allows a parent to transfer assets for the benefit of their disabled child either during the parent’s lifetime or after the parent’s death. The beneficiary must meet the eligibility requirements for services from the state department or county board of Developmental Disabilities, or from the county board of alcohol, drug addiction, or mental health.

Third-Party Discretionary Trust
A Discretionary Trust must also be funded with the resources of someone other than the beneficiary, either during the funder’s lifetime, or through the provisions of his or her will. These are appropriate when the person establishing the trust wants it to benefit a group or class of beneficiaries that includes the recipient or prospective recipient of means-tested government benefits. The terms of the trust do not mandate that any beneficiary receive any particular amount of trust funds, nor can any one beneficiary demand that trust funds be distributed for his or her benefit. Therefore, the trust funds are not considered to be assets of any one beneficiary, the funds are not available for food or shelter, and no Medicaid payback provision is required. A Discretionary Trust can also be established for a single disabled beneficiary, but it may be subject to scrutiny as an available resource for benefit eligibility purposes.

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