A special needs trust can be created to ensure that beneficiaries who are disabled can avoid losing access to essential government benefits such as SSI, state-sponsored Medicaid, or federal housing assistance. Special needs trusts can provide benefits and protect the assets of the disabled. Special Needs Trusts are frequently used to protect an inheritance on behalf of a disabled person. They can also be used in conjunction with structured settlements in personal injury settlements. Special Needs Trusts are also known as OBRA Trusts named for the federal Omnibus Budget Reconciliation Act of 1993, which authorized transfers to a special needs trust to be exempt from Medicaid transfer penalties if the trust is established for the benefit of certain “disabled” individuals. The Illinois legislature has also authorized the use of special needs trusts for disabled beneficiaries: “A discretionary trust for the benefit of an individual who has a disability that substantially impairs the individual’s ability to provide for his or her own care or custody and constitutes a substantial handicap shall not be liable to pay or reimburse the State or any public agency for financial aid or services to the individual except to the extent the trust was created by the individual or trust property has been distributed directly to or is otherwise under the control of the individual, provided that such exception shall not apply to a trust created with the disabled individual’s own property or property within his or her control if the trust complies with Medicaid reimbursement requirements of federal law. Notwithstanding any other provisions to the contrary, a trust created with the disabled individual’s own property or property within his or her control shall be liable, after reimbursement of Medicaid expenditures, to the State for reimbursement of any other service charges outstanding at the death of the disabled individual. Property, goods and services purchased or owned by a trust for and used or consumed by a disabled beneficiary shall not be considered trust property distributed to or under the control of the beneficiary. A discretionary trust is one in which the trustee has discretionary power to determine distributions to be made under the trust.” 760 ILCS 5/15.1 (Source: P.A. 89 205, eff. 1 1 96.) Careful planning can preserve assets and enhance the quality of life of disabled individuals. The mission of the Homer Law Firm is to provide clients with competent, confidential, and ethical legal services at an affordable price. Contact us to schedule an appointment: 630-428-3311. Regular office hours are Monday through Friday from 9:00 a.m. to 5:00 p.m. Saturday and evening appointments are available on request.
