Special Needs Trust

Special Needs Trust

A Supplemental Needs Trust or a Special Needs Trust enables a person (of any age) under a physical or mental disability, or an individual with a chronic or acquired illness, to have, held in Trust for his or her benefit, an unlimited amount of assets.  In a properly-drafted Supplemental Needs Trust, those assets are not considered countable assets for purposes of qualification for certain governmental benefits.

Leaving an inheritance outright to a person with a severe disability is almost never a good idea. An outright gift, like no planning at all, will disqualify the person from needs-based public benefits, including Supplemental Security Income (SSI), Medicaid, and Medicaid-related support services. Disinheritance of a person with a disability is not recommended. Disinheritance preserves entitlement to needs-based public benefits, leaves the child at the mercy of government policy. Public benefits provide at best a marginal, welfare existence, and there is no guarantee that the government will continue to make public benefits available to the disinherited child. Parents often express a desire to leave the disabled child's inheritance to a sibling with instructions to use the funds to care for the child with a disability. However, this create complications the informal agreement of a precatory gift cannot be legally enforced. The actual donee may lose the money. For example, he or she may lose a portion through a property division or the donee may have creditors who take the money. The donee may not have provided in his or her own estate plan for continued management of the assets for the person with a disability. 

A Third Party SNT can be set up to provide direction on how expenditures should be made to benefit.  A Third Party Special Needs Trust is usually the best method for leaving an inheritance to a person with a disability. This type of trust is often called a third party SNT because it is established with the assets of someone other than the disabled person.

Why a Special Needs Trust?

Preserve needs-based public benefits;
Provide additional financial support beyond public benefits;
Select an appropriate individual or entity to manage the inheritance;
Provide guidelines for asset management;
Provide guidelines for living arrangements and personal care;
Provide guidelines for advocacy for the person with the disability;
Facilitate employment and social activities;
Coordinate an entire family's planning; and
Preserve assets for other heirs at the death of the special needs beneficiary