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Attorney Randy Ratliff

First-Party d4A Trusts

Estate Planning Attorney Counseling People in Nashville and Beyond

There are many kinds of trusts that can provide a monetary or strategic benefit for a single person or couple’s estate plan. One particular kind of trust is aimed at protecting the assets of a disabled person while still allowing him or her to qualify for certain government benefits, such as Medicaid or TennCare; these are called “special needs” trusts. Ordinary trusts, while useful for other purposes, are typically not designed to effectuate the same goal as a special needs trust, so it is important to consult with a skilled Nashville estate planning lawyer if you are considering putting your assets into a trust in order to remain (or become) eligible for particular benefits. Attorney Randy Ratliff can help with drafting or administering an existing trust, and he can explain how a trust affects other estate planning tools like a will or power of attorney.

One type of special needs trust is a “First-Party d4A Trust.” This is a self-settled, first-party trust established for the benefit of a disabled trustor. Assets held through a First-Party d4A Trust are not usually considered to be “available resources” for means-tested benefits. There are constraints on the age of the settlor of such a trust, and not every disabled person will be able to enter into such a fiduciary arrangement. These types of trusts are irrevocable, and the settlor must be the sole beneficiary. The settlor of the trust may be able to request an accounting of the trust under some circumstances.

Pros and Cons of a First-Party d4A Trust

The settlor/beneficiary of a First-Party d4A Trust uses his or her own assets to fund the trust (hence the “first-party” language in the name of the trust). While most self-settled trusts are countable assets under regulations establishing qualification for government aid, assistance, or benefits, First-Party d4A Trusts do not count against an applicant for benefits like Medicaid, Supplemental Security Income (SSI), or Qualified Medicare Beneficiary. Allowing the settlor to put his or her personal assets into the trust and use them exclusively for his or her own benefit can add greatly to the quality of life of the settlor/beneficiary.

Unfortunately, there is a major drawback to a First-Party d4A Trust: the payback provision. In exchange for the ability to put one’s assets in a trust and still be able to receive government benefits, First-Party d4A Trusts must contain a provision allowing the government to be paid back for benefits expended on behalf of the settlor of the trust. Of course, the funds available for paying back the government are limited to the amount left in the trust at the settlor’s death; this may or may not be enough to fully reimburse the government for the benefits received by the settlor of the trust.

Consult a Nashville Lawyer About Your Estate Planning Options

Finding the right type of trust or other estate planning tool takes time, skill, and knowledge. Not every law firm has the ability to do this, nor do the many websites on the internet offering one-size-fits-all estate planning documents. Attorney Randy Ratliff works with clients in Nashville, Cool Springs, Franklin, Brentwood, Madison, Goodlettsville, Joelton, Antioch, and Hermitage, as well as other communities in Davidson and Williamson Counties, to protect their hard-earned assets and provide future security for their families by using the most effective tools currently available under the law, sometimes including First-Party d4A Trusts. Call us at 615-656-8282 or contact us online to schedule an appointment to discuss your trust and estate planning needs. Together, we can address your particular financial and legal situation with the goal of protecting your assets, maximizing your estate, and giving you the peace of mind to face your golden years with confidence. We also will take into account your objectives in terms of building a strong future for your loved ones and ensuring that your wishes are honored regarding health care and other late-life matters.