Can a Person of Disability Have Assets Without Being Disqualified for Mainecare or SSI?

Jesse Bifulco, Attorney, Camden Maine

In some situations, you can preserve money, or other valuable assets of a person with a disability using a First Party Supplemental Needs Trust. Typically, the process is to draft the trust to comply with the strict requirements and ask the Probate Court to establish the trust. Notice will be given to DHHS. DHHS will review the trust and tell the Court if they have any issue with the trust. Once the Court orders the trust established, the funds can be transferred to that trust. The person with a disability won’t lose her benefits, and the money can be used to “supplement” or pay for items she needs that Mainecare or other government benefits don’t provide. Read our other blog post about Senior Disability Planning Camden Maine.

The funds of a person with a disability are used to fund or establish a first party supplemental needs trust. The federal law, and Maine law allows these trusts. Examples include a Mainecare recipient who inherits money (from a parent’s estate); someone in a car accident who receives a settlement but is so disabled they qualify for SSI or other needs based government programs; when a person with a disability receives a government benefit gets, receives, or has a right to receive money.

This is not to be confused with the Third-Party Supplemental Needs Trust. With the Third-Party Supplemental Needs Trust, the money or asset does not belong to the person with a disability. In many instances a family member may set up such a trust for the benefit of the person with disability gifting money into the trust. That is called a third-party Supplemental Needs Trust. But when the person with a disability already is disabled and has a right to receive money or valuable assets in her or his own name, that property can be put into a First Party Supplemental Needs Trust.

In many instances a family member may set up such a trust for the benefit of the disabled person gifting money into the trust.

How MaineCare and SSI work with a First Party Supplemental Needs Trust

Maine DHHS, the agency that administers Mainecare (what is called Medicaid in the federal government and other states) keeps track of all the money they spend on the care of a person with a disability. DHHS will review your First Party Supplemental Needs Trust before approving it. DHHS will make sure the trust complies with the legal requirements which allow the assets to not be included and not make the Mainecare recipient ineligible.

Here is a list of the requirements for a First Party Supplemental Trust in Maine. The requirements are explained below.

The First Party Supplemental Trust must be…

The First Party Supplemental Trust must be Irrevocable

The disabled individual must be under age 65 when the First Party Supplemental Trust is set up

The beneficiary must be disabled as that term is defined in the SSI regulations

The only person who can benefit from that First Party Supplemental Trust is the person with disability.

The First Party Supplemental Trust must be established by one of these people: the person with disability by Court order, the person’s of disability parent, grandparent, legal guardian (conservator) by Probate court order.

After the person with a disability dies, any assets left in the trust MUST be paid to the state of Maine.

First Party Supplemental Trust Requirements Explained

Irrevocable. What does it mean to say a First Party Supplemental Trust is Irrevocable? That means it cannot be changed or terminated by its own terms. There is an exception. The First Party Supplemental Trust can say that it can be amended or changed so that the trust continues to comply with the law that allows it to be exempt from inclusion for Mainecare purposes.

Age when set up. The individual must be under age 65 when putting their own assets into a First Party Supplemental Trust. After age 65, the protection stays. However, the disabled person cannot add any more property to the trust.

Definition of Disability. If the person with disability has been found to be disabled and qualified for SSI, they meet this definition. The person doesn’t actually have to receive SSI however. They merely need to be disabled as that term is defined in the SSI regulations. DHHS will make its own decision about disability, if Social Security has not already found the person to be disabled.

Trust for Sole Benefit of the Person with Disability. The First Party Supplemental Trust must be for the sole benefit of the disabled person. How is that defined? A trust is considered to be for the “sole benefit of” the individual if no other individual or entity can benefit from the assets transferred in any way. That means now, and in the future. In other words, the trust cannot say that if any money is left over, it goes to someone other than the state of Maine. The trust can allow for a fee to the trustee to manage the trust.

Who Can Set Up a First Party Supplemental Trust? The disabled person or the disabled person’s parent, grandparent, or legal guardian. Under the Powers of conservator requiring court approval, the Maine Probate Code Section 5-414 1. E., lists that Court approval is required to create an irrevocable trust.

Who Can Get The Property After the Disabled Person Dies? the Trust Property Sixth, the First Party Supplemental Trust must say that after the disabled beneficiary’s death, the state will receive all property remaining in the trust up to the amount of the total medical assistance paid on behalf of the individual.

What can the money be used for?

The Special Needs Trust can be used for a variety of life-enhancing expenditures without compromising your loved ones’ eligibility such as:

Clothing
Specialized medical equipment not covered by Medicaid or insurance
Annual check-ups at an independent medical facility
Personal care attendant or escort
Special dietary needs
Attendance of religious services

Supplemental education and tutoring
Out-of-pocket medical and dental expenses
Transportation (including purchase of a vehicle)
Specialized automobile or van adaptations
Maintenance of vehicles

Purchase materials for a hobby or recreation activity
Funds for trips or vacations
Funds for entertainment such as movies, shows or ballgames.
Purchase of goods and services that add pleasure and quality to life, such as furniture and home furnishings, videos and electronics.
Athletic training or competitions

Physical and occupational therapy not covered by insurance or governmental benefits