What restrictions are placed on Self-Settled Special Needs Trusts?
Self-settled special needs trusts are much more complicated than their third-party equivalents. Usually (but not always), a self-settled special needs trust must comply with a federal law first enacted in 1993. That law requires that most self-settled special needs trusts actually be established by a judge, a court-appointed guardian or the parents or grandparents of the beneficiary (Social Security regulations may limit creation of trusts to the first two categories in most circumstances). In addition most self-settled special needs trusts will have to include a provision repaying state Medicaid agencies (like ALTCS or AHCCCS, in Arizona) for any benefits, payable at the death of the beneficiary. Such a provision is often called a “pay-back” provision.
