South Carolina Special Needs Trust Information

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 South Carolina.

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

South Carolina Law

S.C. Code § 62-5-433(A)(2) VIII. SPECIAL NEEDS TRUSTS (“SNT”) (Also called “SUPPLEMENTAL NEEDS TRUSTS” or “d(4)(A) Trusts”) (Use this information also for “Pooled Fund Trusts”)

Statutory authority:

Both SNTs and Pooled Fund Trusts are statutorily authorized trusts. 42 U.S.C. 1396 d(4) (A) authorizes Special Needs Trusts, and 42 U.S.C. 1396 d(4) (C) authorizes Pooled Fund Trusts.

Use of Trusts and background rational: These trusts allow a disabled minor or disabled adult who receives certain governmental benefits to continue to be eligible for the benefits2 even if the individual is awarded and receives settlement proceeds from civil actions, by way of inheritance, or by other funding sources. Normally, the receipt of additional proceeds would disqualify the individual from being eligible for governmental benefits. SNTs and Pooled Fund Trusts carve out an exception which allows the individual both to receive the proceeds and to maintain eligibility for governmental benefits.

The premise behind a SNT and Pooled Trust is that the “extra” proceeds from the civil action or inheritance are available for specific supplemental items or supplemental assistance to the special needs individual. That is, the “extra” trust funds can be used to pay for things that are above or in addition to the items provided by governmental benefits. To that end, the funds in the SNT or Pooled Trust can be used by the Trustee to purchase goods or pay for services for the special needs individual (hereinafter the “Trust Beneficiary” or “Beneficiary”) that would not normally be covered by governmental benefits (anything from medications not covered by Medicaid to a home to a vacation—items considered “extra” to what is provided by the governmental benefits) . . .

The Supreme Court of South Carolina, Revised Minor Settlement Procedure, 2011-07-26-01.