Special Needs Trusts in Nevada
Living with a disability can come with many challenges. One challenge is receiving Supplemental Security Income (SSI) and Medicaid while also being able to access funds to meet needs that aren’t covered by SSI and Medicaid. Fortunately, there is a way to ensure a loved one’s needs are met without jeopardizing their eligibility for SSI and Medicaid: special needs trusts in Nevada. If you need to set up a special needs trust, contact one of our experienced attorneys to discuss your needs and options.
What Is a Special Needs Trust in Nevada?
You may have heard of special needs trusts, also known as supplemental needs trusts. A special needs trust is defined by the state of Nevada as any trust that “meets the requirements for such a trust under any law or regulation of this State relating to the treatment of trusts for purposes of eligibility for Medicaid or other needs-based public assistance.”
What does that mean? A special needs trust allows the beneficiary to have money and/or property without jeopardizing his or her eligibility for SSI or Medicaid. There are strict limits to how much money or property of value a person can have and still receive Medicaid or SSI. A trust places assets under the care of a trustee who determines how and when those assets are used to benefit the beneficiary. This allows the beneficiary to live comfortably while not having assets or money that would push them over the limits allowed by Medicaid and SSI.
Who Can Create a Special Needs Trust and Who Can Benefit From the Trust?
A parent, grandparent, court or guardian can create and fund a special needs trust for a disabled individual. This would be a third-party trust. Since the passing of the Special Needs Trust Fairness Act of 2015 the disabled individual can also create and fund their own special needs trust if they are mentally capable, creating a first-party trust.
The beneficiary of a special needs trust in Nevada must be disabled mentally or physically. A first-party trust must be set up before the beneficiary is 65-years-old, be irrevocable and reimburse Medicaid once the beneficiary has passed away. Third-party trusts do not have the same requirements.
What Can Be Put in a Special Needs Trust?
Special needs trusts can be funded in very similar ways to other trusts. Cash, investments, life insurance policies that pay out when the policy holder dies, insurance settlements, legal settlements, and other property can all be used to fund these trusts. There is no minimum amount required to fund special needs trusts in Nevada.
It is also possible to designate property through a will, beneficiary designations on bank or brokerage accounts, or retirement plans to fund a special needs trust. Jewelry, art, real estate, and other tangible assets can also be placed in a special needs trust.
How Can the Trust Be Used?
A special needs trust can be used for a variety of goods and services that benefit the beneficiary. Some examples include:
- Personal care attendants
- Home furnishings
- Out-of-pocket medical or dental expenses
- Physical rehabilitation
- Services such as cell phone, internet, or home cleaning
- Pet care such as food or vet care
It is important to note that the trustee cannot give money directly to the beneficiary. This could jeopardize the beneficiary’s SSI or Medicaid eligibility. Instead, the trustee should use funds from the trust to purchase whatever the beneficiary needs or wants, based on the trustee’s judgment of what is in the beneficiary’s best interests.
Why Should You Create a Special Needs Trust?
The most common reason for creating a special needs trust is to preserve a loved one’s eligibility for SSI and Medicaid. There are other benefits to a special needs trust, including:
- Assets can be protected from paying creditors or judgments
- Allows you to provide for a disabled loved one who may otherwise recklessly spend what is given to them
However, it is important to understand that when a first-party trust’s beneficiary passes away, Medicaid must be reimbursed from the trust. This can wipe out what remains of the trust. Also, whatever is placed in the trust may not be returned to the person who gave it once the beneficiary passes away or if the trust is dissolved, if it’s a third-party trust.
Do You Need a Special Needs Trust?
Creating a properly structured special needs trust in Nevada can be complicated and time-consuming. If you’d like to create a trust but would like assistance or have other questions not answered here, we may be able to help. Reach out to our knowledgeable attorneys to discuss your options.
LKP has highly experienced Nevada trust law attorneys. If you or someone you know needs assistance with trust creation or trust and estate litigation in Nevada, whether in Las Vegas, Henderson, Reno, or Carson City, contact us for a free consultation using our online contact form or call 702-333-1711.
Attorney Kennedy Lee practices in all aspects of trust and estate law. He views all legal issues from multiple angles (e.g. from litigation to administration point of view) to provide a higher quality of service to our client.