Special Needs Trusts and Related Planning
Special needs trusts help disabled Arizona individuals take
advantage of public benefits programs and other planning opportunities.
Frazer Ryan Goldberg & Arnold
LLP is a 2017 Best Law Firms selectee for Elder Law (Metro Tier 1)
A special needs trust is often created to
help a disabled person qualify for needs-based government benefits. Needs-based
benefits are those provided by the federal or state government to individuals
who fall below certain income and resource limits and qualify for Supplemental
Security Income (SSI) and Medicaid, or more particularly, the Arizona
Care System (ALTCS).
Through the creation of a special needs trust, an individual
with resources in excess of the limits provided by those government programs can
still qualify after transferring assets into the trust.
There are multiple types of special needs trusts, such
as first- and third-party trusts.
A first-party trust is created with resources belonging to
the disabled person. If the person owns resources that are valued greater than
the resource limit for SSI and ALTCS, the law allows for those resources to be
moved over to the trust, making them non-countable in the eligibility
Common situations giving rise to the need to establish a
first-party special needs trust are the receipt by the disabled person of an
inheritance or a settlement from a personal injury claim. Consider these key
They can only hold assets that belonged to the disabled
person, and not someone else’s resources
They must be created before the disabled person turns 65
They cannot be established by the disabled person; only the
following may establish a first-party special needs trust: a parent, a
grandparent, a guardian or a court.
The State of Arizona must be designated as the primary
beneficiary of anything remaining in the trust when the beneficiary dies, for
The other common type of trust is one created by someone
other than the disabled person (most commonly a parent, grandparent or other
family member) and is referred to as a third-party trust. Since those
resources never belonged to the disabled person, they will not count as a
resource for those needs-based programs. These trusts allow the trustee full
discretion on using the resources for the benefit of the disabled person. Unlike
first-party trusts, the state is not a beneficiary, allowing the person creating
the trust to designate anyone as a final beneficiary.
Our experienced planning attorneys can help you understand
these trusts and guide you toward the creation of the proper trust that will
supplement available government benefits.
Chick Arnold is a Certified Specialist in
Estate and Trust Law (Arizona Board of Legal Specialization). Chick chairs the
Maricopa County Superior Courts' Task Force on Mental Health Services and is a
past chair of the State Bar of Arizona's Elder Law and Mental Health Section.
Marsha Goodman focuses on
life care planning to
enhance the health, safety and well being of her elderly and disabled clients.
She is the 2015-16 Chair-Elect of the State Bar of Arizona's Probate and Trust
Jim McDougall, a former Maricopa County
Superior Court judge, helps families deal with issues of incapacity for an
incapacitated or disabled relative. He often helps clients obtain a guardianship
or conservatorship, and he has represented individuals over whom the
guardianship or conservatorship is sought.
For four years between college and law school,
worked in Maricopa County’s public mental health system. During law school, Josh
spent two years as a crisis specialist in Maricopa County's Crisis Response