Trusts for Adults Drawing SSI
Supplemental Security Income, or SSI, provides benefits to individuals who are blind, disabled or over age 65. To qualify for SSI, you must also have limited income and resources. Though Social Security counts most income and resources against you when determining your eligibility for SSI, it exempts income from certain types of trusts.
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Special Needs Trusts
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A special needs trust is a legal arrangement made for the benefit of an individual with a disability or chronic illness. Such a trust can hold an unlimited number of assets for a disabled or ill individual without affecting his ability to qualify for government assistance, such as SSI. The disabled individual can use the funds in the trust to provide only the needs that the government doesn't provide. If government assistance is sufficient to meet all of the beneficiary's needs, he can't receive distributions from the trust. However, in most cases, government assistance provides only a portion of the beneficiary's needs, so the trust can provide the rest.
Pooled Trusts
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Unlike a special needs trust, which must be created by an individual other than the beneficiary, a pooled trust is a trust that the beneficiary creates for himself. If you receive SSI and create a pooled trust, you can transfer all assets and monthly income above the amount Social Security allows you to keep into the trust. You can use the funds in the trust to pay your basic monthly bills, such as rent and utilities. Pooled trusts are typically available only to individuals over age 65.
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Other Trusts
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Social Security considers most other types of trusts, including standard revocable and irrevocable trusts, to be countable resources. If you use your assets to form a revocable trust, Social Security includes the full value of the trust in your resources. If you use your assets to form an irrevocable trust, Social Security only counts the portion of the trust that could make payments to you under any circumstances.
Considerations
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Not all states allow the creation of pooled trusts. If you create a pooled trust and there are funds remaining in it after you die, it will either belong to the nonprofit organization that established the trust or the trust will use the money to repay Social Security. If someone created a special needs trust for you and there are funds or assets remaining after you die, the trust must repay Social Security only if there are funds or assets remaining that originally belonged to you.
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