What is a Special Needs Trust? (SNT)
Special Needs Trusts have become a common and effective planning technique for families of persons with disabilities because they enable families to secure the future long term care of their disabled loved one. Establishing a Special Needs Trust (SNT) can allow a disabled beneficiary to become and remain eligible for need-based government benefits, such as Medicaid and Supplemental Security Income (SSI), which often serve as significant sources of funding for the disabled beneficiary. Needs based government benefit programs take specific assets into account when calculating eligibility, so even with as little as $2000 in the bank, a potential beneficiary may be disqualified from Medicaid and other benefits. Even assets left to a disabled loved one in a will may possibly jeopardize a disabled beneficiary’s ability to receive government benefits. The good news is that under the terms of a Special Needs Trust, federal and state laws encourage that all available private and governmental resources are maximized in order to fully provide for the needs of the disabled.
Special Needs Trusts can be used for a number of different purposes, and established by either the beneficiary themselves or by some third party. The treatment of each trust may be different under federal law and state regulations, and in some cases there may be restrictions on the eligibility of certain people to create these trusts. For example, an SNT used to cover more than a basic set of needs will disqualify a beneficiary from public benefits. A Supplemental Care SNT is used when a family’s assets and resources cannot adequately fund all of the special needs of the beneficiary and where government programs will be constituting a significant portion of funding the beneficiary’s needs. The Trustee of a SNT can be a nonprofit entity, a person, or a corporation such as a bank.
Though Medicare and SSI are often the primary sources of funding, they tend to only cover a disabled person’s most basic and essential needs. With a properly drafted SNT your loved one can benefit from the family’s privately held assets to provide support for nonbasic needs in addition to the government provided benefits. The beneficiary would first draw from any government benefits to which he or she is entitled, and the SNT would serve as a secondary source of supplemental support for additional quality of life enhancements. The Supplemental Care SNT is designed to fully maximize all available public and private resources and for that reason is the far more frequent choice. Feel free to give us a call to discuss what kind of trust is most appropriate for your specific facts.
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