If you have a client who is receiving public benefits and has been offered a settlement in a personal injury case, you should consider placing the funds in a “Special Needs Trust”.
Historically, a person who had any assets, including trust assets, was not eligible to receive Medicaid or any other public benefits. OBRA-93, Section 1396p(d)(4)(A) has an amendment that authorizes the creation of trusts to allow disabled persons under the age of 65, who are receiving funds from a personal injury settlement, to place those funds in a special or supplemental needs trust and at the same time preserve their right to collect medical assistance benefits and supplemental social security benefits (SSI). The one provision is that upon the death of the beneficiary of the trust, the public entity that provided the benefits shall receive any amounts remaining in the trust up to the amount of the benefits paid on the individual decedent’s behalf.
Any such trust must be approved by the court and the consent of the public entity (such as welfare or social security) that is providing benefits.