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 Special Needs Trust  |  Disability Trusts | Pooled Trusts

Special Needs Trust
A special needs trust or SNT (also referred to as a supplemental needs trust) is a discretionary non-support trust designed to provide for a disabled person's supplemental care, which is defined as items and services not provided by any public benefit programs such as Supplemental Security Income ("SSI") and/or Medicaid.  These trusts are typically set up with assets not belonging to the disabled person.

Disability Trusts
Disability trusts are authorized under both federal and state law to shelter assets for a disabled individual without disqualifying him or her from eligibility for public benefits programs.  They are most commonly used to protect personal injury settlements and inheritances.   

These trusts are set up with assets belonging to the disabled person.  It is important to set up the right kind of trust because there are important differences between SNT and disability trusts. 

In both types of trusts, funds are transferred into the trust and managed by a person called a "trustee."  The trustee is responsible for managing, investing and distributing the assets or property of the trust.

In both types of trusts, funds are transferred into the trust and
managed by a person called a "trustee".  The trustee is responsible for managing, investing and distributing the assets or property of the trust.

The trustee holds the funds for the benefit of the disabled person, who
is referred to as the "beneficiary."  The person who establishes the trust and who usually makes the initial transfer of assets is called the "grantor" or "settlor".
Extreme care should be taken to make sure the trust is properly set up so there is no loss of eligibility for benefits. 

We recommend consulting with a lawyer who concentrates their practice in this area, like SMS.


Compliance Requirements For Disability Trust
In order for the disability trust to be legally exempt as an asset, it must comply with the following requirements:

The beneficiary cannot compel distributions.
Trust funds should not be used for food or shelter related expenses or for services already provided by a public or private benefit program.
The trust must be irrevocable, i.e., it cannot be revoked or cancelled.
Additionally, the beneficiary of the trust must meet certain requirements as follows:
The beneficiary must be under age 65 and "disabled" as that term is defined in Social Security law.
The State must be named as a remainder beneficiary with regard to any funds remaining at the beneficiary's death to the extent of medical assistance paid.
The trust must be established by a parent, grandparent, legal guardian or court.
The trust must be approved by the State.


Pooled Trusts
A "pooled" trust is an alternative to a special needs trust and/or a disability trust.  It performs the same functions and is also authorized by state and federal law.  In a pooled trust, the beneficiaries' funds are pooled together for investment purposes and managed by a non-profit organization. 

Each beneficiary has a sub-account containing their own funds.  There
is no age limitation on participants.  Upon the death of a pooled trust

Colorado's pooled trust is managed by Colorado Fund for People with Disabilities, Inc.

1 Broadway, #A330
Denver, CO 80203 
(303)733-2867.
 www.cfpdtrust.org
beneficiary, the funds are retained by the non-profit organization rather than being paid to the state.  A plan must be developed to prove to the State that all funds should be spent during the individual's lifetime if the disabled person is 65 or over.  The pooled trust is the only trust that can be used for a disabled person age 65 or over.
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