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Special Needs Trusts: What they are, What to Consider, and More

Special Needs Trusts: What they are, What to Consider, and More

What is a Special Needs Trust?

A special needs trust, sometimes called a supplemental needs trust (SNT), is an irrevocable trust that provides resources to enhance a disabled beneficiary’s quality of life without disqualifying the beneficiary from means-tested public benefit programs like Medicaid (MA) or Supplemental Security Income (SSI). The beneficiary does not own the trust’s assets and cannot control them. Instead, a trustee manages the assets and makes distributions that will help the beneficiary without affecting their eligibility for critical health care assistance or income support. When considering special needs trusts, it is important to understand:

  • Special needs trust beneficiary rights
  • Special needs trust requirements
  • What assistance, government programs, and benefits the beneficiary qualifies for
  • Laws regarding special needs trust planning
  • The beneficiary’s unique wants and supplemental needs  

Who Can Establish a Special Needs Trust?

The person establishing a special needs trust is called a “grantor” or “settlor.” There are different types of special needs trusts. A disabled person can be the grantor of his or her own SNT (called a first-person or self-funded SNT), or the grantor can be a third party like a parent or grandparent of a disabled person (called a third-party SNT). A third-party SNT can be set up during the grantor’s lifetime or after their death. To ensure the special needs trust works as intended, it should be drafted by a skilled attorney who understands both the law governing SNTs along with the beneficiary’s needs and desires.

Benefits of Special Needs Trusts

The benefits of a special needs trust are that it will often cover what MA and SSI won’t. For example, a disabled person who qualifies for MA or SSI may need specialized transportation or certain therapies or assistive technologies they cannot afford, and MA won’t pay for. Income or assets in the special needs trust could be used to pay for those needs. Similarly, resources in the SNT could be used to pay for a beneficiary’s travel and social events, or to purchase a computer or cell phone that gives them more independence.

Special needs trust planning and choosing a special needs trust trustee are important decisions. SNTs are complex legal documents, and law governing public benefits vary by state and constantly change. At Fiduciary Partners Trust Company, we work hard to keep up with laws affecting public benefits eligibility. We also partner with expert legal advisors to preserve both benefits and peace of mind for people with disabilities and their families.

Contact us today to learn more about the next steps in setting up special needs trusts.

Friday, June 18, 2021
Categories: Insights

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