Also known as: (d)(4)(A) trusts · d(4)(A) trust · 42 U.S.C. § 1396p(d)(4)(A) trust · special needs trust · SNT
Written by attorneys · grounded in primary & secondary sources — see below
A statutory exception to Medicaid resource rules that permits an irrevocable trust for a disabled person under age sixty-five to hold assets without disqualifying the beneficiary from public benefits. The trust must be created by the beneficiary or a parent, grandparent, guardian, or court using the beneficiary's assets. It must also contain a payback provision reimbursing the state for medical assistance upon the beneficiary's death.
Dolores Diaz created a trust directing outright distribution of rental properties to her son Demetrius upon her death. Demetrius later suffered a severe brain injury and became dependent on Medicaid. The trustee petitioned to convert the remainder into a (d)(4)(A) trust. The court approved the change because the disability was unanticipated and the structure preserved assets while maintaining eligibility for public benefits.
David Dawson established an irrevocable trust providing an outright remainder to his daughter Doris. After a factory accident left Doris permanently disabled and reliant on needs-based benefits, the successor trustee petitioned to restructure her interest as a (d)(4)(A) trust. The court considered whether the modification would further the settlor's purpose of long-term support without disqualifying Doris from government assistance.
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The trust must be irrevocable and created by a disabled individual under age sixty-five or by a parent, grandparent, guardian, or court using that individual's assets. It must also include a payback provision directing remaining assets to the state upon the beneficiary's death to reimburse Medicaid expenditures.
Assets in a properly formed (d)(4)(A) trust are not counted as available resources for Medicaid purposes. The trustee may use trust funds only for the beneficiary's special needs that Medicaid does not cover, preserving eligibility for public benefits.
Yes, under the expanded equitable deviation doctrine a court may authorize the conversion when circumstances such as the beneficiary's unanticipated disability arise and the change better fulfills the settlor's purpose of providing long-term support.
…a consolidated trust, Ralph A. Riddell,[^maj-1] appeals the trial court's denial of his motion to modify the trust and create a special needs trust on behalf of a trust beneficiary, his daughter, Nancy I. Dexter, who suffers from schizophrenia affective disorder and bipolar disorder. Ralph's deceased father and mother each established…