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Attorney Randy Ratliff

First-Party d4C Trusts

Estate Planning Attorney Advising People in Nashville and Surrounding Communities

There is no such thing as a one-size-fits-all estate plan. Instead, estate planning is a highly personal matter, since one person’s wants and needs will vary substantially from another’s. Marital status, family relationships, relative wealth, current health, and other considerations must be taken into account not only when drafting a will or another document that will become effective upon the testator’s death but also in addressing the needs of individuals who may need to apply for assistance from a means-tested government program like Medicaid or TennCare. At the Randy Ratliff Law Offices, PLLC, Nashville estate planning lawyer Randy Ratliff will be glad to sit down with you and go over your estate planning options, including possibly a first-party d4C trust.

Understanding the Potential Usefulness of a First-Party d4C Trust

Documents such as living wills and durable powers of attorney can be useful for people who are currently in good health but want some security about who will be making health care decisions for them should they become legally incapacitated at some point in the future. Meanwhile, people who are already in declining health or who have special needs often need additional legal tools, such as a trust document. Some people are more familiar with the kind of trust through which a testator may leave property to a person who is too young to manage an inheritance (or who is a spendthrift) once he or she passes. These are called “testamentary trusts.”

However, there are also other trusts, called “inter vivos” trusts, which are effective while the trustor is still living. Some of these trusts are revocable (that is, they may be changed if the trustor so desires), while others are irrevocable (they cannot be changed once established). Special needs trusts are trusts set up for the benefit of a person who is disabled and wishes to qualify for a governmental assistance program like Medicaid, TennCare, or Supplemental Security Income. In most cases, the beneficiary of the trust would not meet the needs test required for these benefits if the assets of the trust were taken into consideration. Fortunately, there are federal laws that permit these individuals (and sometimes family members acting on their behalf) to set aside certain funds in a trust without disqualifying the disabled individual from the program(s) from which he or she needs assistance.

Some special needs trusts are “first-party” trusts, meaning that the disabled individual sets up and funds the trust, while other trusts are “third-party” trusts set up and funded by a qualifying family member. Exactly who may set up or fund a trust is a matter of statute and should be addressed with an attorney on a case-by-case basis. A first-party d4C trust is set up by the beneficiary of the trust, using his or her own assets. It differs from other trusts in that it is a “pooled” trust, administered by a nonprofit entity, in which several different individuals may participate simultaneously. Each has a separate account within the trust, from which funds may be paid to sustain or improve the beneficiary’s quality of life. Funds not paid out during the beneficiary’s lifetime may be required to be turned over to the government to pay back the benefits received through programs such as Medicaid. First-party d4C trusts are typically less expensive to set up and maintain than many other types of trusts; thus, they may be a good option for people of more modest means.

Schedule an Appointment with a Nashville Attorney to Discuss Your Options

At the Randy Ratliff Law Offices, PLLC, we assist people with a wide range of estate planning needs, including not only trusts, wills, and powers of attorney but also charitable planning and the determination of rightful heirs. We also handle family law and elder law cases for people in Nashville, Brentwood, Cool Springs, Franklin, and other areas in Davidson and Williamson Counties. Call us at 615-656-8282 or contact us online to schedule an appointment with a lawyer to discuss your legal needs.