Illinois Special Needs Trusts

An Illinois Special Needs Trust is a legal tool that allows families or caregivers to set aside funds for a person with special needs, without affecting their eligibility for government benefits such as Medicaid, SSI, or other means-tested programs.

In Illinois, a special needs trust is also known as a “supplemental needs trust.” There are two main types of supplemental needs trusts: a first-party supplemental needs trust and a third-party supplemental needs trust.

A first-party supplemental needs trust is funded with the assets of the person with special needs, such as an inheritance, settlement, or a personal injury award. This type of trust must be established before the beneficiary turns 65 years old and is subject to certain restrictions. Also known as a “self-settled” or “payback” trust, a first-party supplemental needs trust, is a type of trust that allows an individual with a disability to retain their eligibility for government benefits, while also setting aside their own assets to supplement their needs.

This type of trust is typically established by the individual with a disability, using their own funds, in order to provide for their own needs while still maintaining eligibility for government benefits such as Medicaid and Supplemental Security Income (SSI). The term “supplemental needs” refers to the fact that the trust is designed to supplement, not replace, government benefits.

One of the key features of a first-party supplemental needs trust is that it must contain a “payback” provision, meaning that upon the death of the beneficiary, any remaining funds in the trust must be used to reimburse the government for the cost of benefits received by the beneficiary during their lifetime. This requirement is intended to ensure that the government is not left with the cost of providing benefits that could have been paid for by the trust.

A third-party supplemental needs trust, on the other hand, is funded with assets that belong to someone other than the person with special needs, such as a parent, grandparent, or other family member. There are fewer restrictions on this type of trust, and it can be established at any time.

A third-party supplemental trust allows someone to provide additional financial support to a loved one who has a disability, without interfering with their eligibility for government benefits. This type of trust is often used by families or loved ones of individuals with disabilities to supplement government benefits, such as Medicaid or Supplemental Security Income (SSI).

The term “third-party” refers to the fact that the trust is funded by someone other than the beneficiary. The trust is typically established by a family member or friend of the beneficiary, and the funds in the trust are used to supplement the beneficiary’s income or provide for their care and support.

One of the key benefits of a third-party supplemental trust is that it can provide a safety net for the beneficiary in the event that government benefits are reduced or discontinued. The trust can also help to ensure that the beneficiary has access to funds for expenses that are not covered by government benefits, such as dental or vision care.

Overall, a third-party supplemental trust can be a valuable tool for families or loved ones who want to provide financial support to an individual with a disability without jeopardizing their eligibility for government benefits.

The purpose of a special needs trust is to provide financial support for the person with special needs while also preserving their eligibility for government benefits. The trust is managed by a trustee, who is responsible for distributing funds to the beneficiary in a way that does not interfere with their eligibility for benefits. It is important to consult with a qualified attorney who specializes in special needs trusts in Illinois to determine which type of trust is appropriate for your situation and to ensure that the trust is properly established and managed.

If you are thinking about a Special Needs Trust, local attorney Andrew Szocka provides thorough and speedy real-estate assistance in the Chicagoland area.  To schedule a free initial consultation, visit Andrew Szocka, P.C. online or call the office at (815) 455-8430.