Q: Can I set up a trust or something similar for my mentally challenged sister? She currently receives state insurance and cannot have more than $2000 in her bank account. Otherwise, she will lose her health benefits if she has more than that. Do you know the best way to put money away for her that won’t interfere with these benefits?
A: It sounds like she received Medicaid benefits? There are two types of special needs trusts (SNT) which can be used to maintain eligibility for Medicaid while improving a disabled person’s quality of life. They are categorized as first-party and third-party. A first-party SNT can only contain assets belonging to the disabled individual and falls into two categories; the d4A self-settled trust and the d4C pooled trust. A d4A SNT can be established by a parent, grandparent, guardian, or court. An account in a d4C pooled trust can be opened by a parent, grandparent, guardian, court, or the disabled individual. If you are thinking of establishing a SNT using your own money or someone other than your sister’s money, you will be doing the SNT. This is a very complicated area of the law and you will need the help of an experienced elder law attorney who does special needs trusts. You can locate one by going to the website of the National Academy of Elder Law Attorneys or the PA Association of Elder Law Attorneys. Be sure to ask any attorney if he or she uses SNT’s.