Payback provision
Certified Financial Planner glossary · Certified Financial Planner
Definition
The requirement that a first-party special needs trust reimburse Medicaid at the beneficiary’s death.
Payback provision in plain English
Parents fund a first-party special needs trust with a personal-injury settlement so a child keeps Medicaid, then assume the leftover trust will go to siblings free and clear. Payback provision is the requirement that a first-party special needs trust reimburse Medicaid at the beneficiary's death. Third-party SNTs generally avoid that clawback. Fund with the beneficiary's own money or settlement and, at death, expect Medicaid payback before remainder heirs celebrate.
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