A special needs trust is established to prevent people from losing benefits from certain government programs after receiving a settlement. An influx of wealth can make one ineligible for benefits from Supplementary Security Income (SSI), Veterans Aid and Attendance, Medicaid, and government housing. A special needs trust supplements but does not replace, these benefits by paying for non-covered services or equipment. Below are the applicable laws to establishing a special needs trust in Pennsylvania.
Federal Law
U.S. Code Section 1396p.(d)(4)(A).
(4) This subsection shall not apply to any of the following trusts:
(A) A trust containing the assets of an individual under age 65 who is disabled (as defined in section 1382c(a)(3) of this title) and which is established for the benefit of such individual by the individual, a parent, grandparent, legal guardian of the individual, or a court if the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter. Full text
Pennsylvania Law
Pennsylvania Statutes Title 62 P.S. Poor Persons and Public Welfare § 1414. Special needs trusts.
(a) A special needs trust must be approved by a court of competent jurisdiction if required by rules of court.
(b) A special needs trust shall comply with all of the following:
(1) The beneficiary shall be an individual under the age of sixty-five who is disabled, as that term is defined in Title XVI of the Social Security Act (49 Stat. 620, 42 U.S.C. § 1381 et seq. ).
(2) The beneficiary shall have special needs that will not be met without the trust.
(3) The trust shall provide:
(i) That all distributions from the trust must be for the sole benefit of the beneficiary.
(ii) That any expenditure from the trust must have a reasonable relationship to the needs of the beneficiary.
(iii) That, upon the death of the beneficiary or upon the earlier termination of the trust, the department and any other state that provided medical assistance to the beneficiary must be reimbursed from the funds remaining in the trust up to an amount equal to the total medical assistance paid on behalf of the beneficiary before any other claimant is paid: Provided, however, That in the case of an account in a pooled trust, the trust shall provide that no more than fifty percent of the amount remaining in the beneficiary’s pooled trust account may be retained by the trust without any obligation to reimburse the department.
(4) The department, upon review of the trust, must determine that the trust conforms to the requirements of Title XIX of the Social Security Act ( 42 U.S.C. § 1396 et seq. ), this section, any other State law and any regulations or statements of policy adopted by the department to implement this section . . . Pennsylvania, Title 62, Section 1414. Special Needs Trusts.
