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A life-enhancing trust you can grow over time.
A Payback Trust (also known as a (d)(4)(A) trust) enables a person with a disability to protect his or her assets if they receive an inheritance or lawsuit settlement, while still preserving their eligibility for essential lifelong supports.
An individual with a disability under 65, their parent, grandparent or legal guardian can establish this trust. The court can also establish a Payback Trust.
If an individual with a disability will receive funds in their name, particularly as a result of a personal injury or a malpractice settlement, a Payback Trust could be the solution. Assets in the Payback Trust are used for the sole benefit of the individual with a disability to improve his or her quality of life. If all the funds in the Payback Trust have not been spent by the time the individual with a disability passes away, the remaining funds are first used to “pay back” the state(s) for the cost of providing Medicaid services to the individual.
Following this payback, any remaining funds are distributed according to the trust document. Beneficiaries can leave these funds for family members, friends or charitable organizations.