Planning for the future of a loved one with special needs can feel overwhelming, especially when considering their financial security and eligibility for government benefits. A Special Needs Trust (SNT) is a powerful legal tool that helps protect assets while ensuring your loved one maintains access to essential public assistance programs like Supplemental Security Income (SSI) and Medicaid. If you’re a Tennessee resident exploring special needs trusts, working with an elder law attorney can ensure the best possible outcome for your family.
What Is a Special Needs Trust?
A Special Needs Trust (SNT) is a legal arrangement designed to hold and manage assets for an individual with disabilities without jeopardizing their eligibility for government benefits. Funds in an SNT can be used to cover expenses that enhance the individual’s quality of life, such as:
- Medical and dental care not covered by Medicaid
- Personal care attendants
- Educational expenses
- Transportation
- Recreation and vacations
- Assistive technology and adaptive equipment
Tennessee law recognizes different types of Special Needs Trusts, and choosing the right one depends on your loved one’s unique situation.
Types of Special Needs Trusts in Tennessee
1. First-Party Special Needs Trust
Also known as a Self-Settled Special Needs Trust, this trust is funded with the disabled individual’s own assets, such as an inheritance, personal injury settlement, or existing savings. The key aspects of a first-party trust include:
- The trust must be established by a parent, grandparent, legal guardian, or the court.
- It must be irrevocable (cannot be changed once created).
- Upon the beneficiary’s passing, any remaining funds must be used to reimburse Medicaid.
2. Third-Party Special Needs Trust
A Third-Party SNT is funded by assets belonging to someone other than the beneficiary, typically a parent, grandparent, or other family members. Unlike a first-party trust:
- The grantor (person establishing the trust) can dictate how the remaining funds are distributed after the beneficiary’s passing.
- There is no Medicaid payback requirement.
- It is a great estate planning tool for families who want to ensure long-term financial security for a loved one with disabilities.
3. Pooled Special Needs Trust
A Pooled SNT is managed by a nonprofit organization and combines assets from multiple individuals into a collective trust. Each beneficiary has a separate account, but funds are managed together to maximize investment potential. This type of trust:
- Is often used for individuals who may not have a family member available to manage a trust.
- Requires Medicaid reimbursement upon the beneficiary’s passing.
- Provides professional management and oversight.
Why Work with an Elder Law Attorney?
Navigating the complexities of special needs planning requires in-depth knowledge of both state and federal regulations. An experienced elder law attorney in Tennessee can help in the following ways:
1. Ensuring Government Benefit Eligibility
A poorly structured trust can unintentionally disqualify your loved one from Tennessee Medicaid (TennCare) or Supplemental Security Income (SSI). An elder law attorney will ensure your trust meets all necessary legal requirements to preserve benefits while supplementing care needs.
2. Customized Planning for Your Loved One’s Needs
Every individual with special needs has unique financial and care requirements. An elder law attorney can craft a personalized plan that aligns with your family’s goals and long-term care considerations.
3. Protecting Family Assets
A Third-Party Special Needs Trust can prevent your assets from being counted toward your loved one’s eligibility for benefits. Without proper planning, an inheritance or financial gift could disqualify them from crucial assistance programs.
4. Establishing a Trustee for Financial Oversight
Managing an SNT requires careful financial oversight. An attorney can help you select a reliable trustee, ensuring funds are used appropriately while complying with legal requirements.
5. Staying Updated on Legal Changes
Tennessee’s Medicaid laws and federal regulations governing SNTs may change. Elder law attorneys stay informed on evolving policies to ensure your trust remains compliant and effective over time.
Next Steps: Start Planning Your Special Needs Trust Today
If you’re ready to secure your loved one’s financial future, the team at Elder Law of Nashville is here to help. Our experienced attorneys specialize in estate planning, Medicaid planning, and special needs trusts to protect your family’s assets while optimizing benefits and care options.
📞 Schedule a Consultation Today – Contact us at Elder Law of Nashville to discuss the best trust options for your loved one.
📍 Local Resources: Learn more about Tennessee Medicaid (TennCare) eligibility and benefits at TennCare.gov.
Planning for a loved one’s future is one of the most meaningful ways to show your care. Let us guide you through every step to ensure they receive the security and support they deserve!