Special Needs Trusts
Some families must assume special responsibilities in order to care for a loved one who will require help through adulthood due to physical or mental challenges. To help these families, The Probate Pro offers Special Needs Planning. This planning uses state and federal Trust Laws to protect the assets of a person with disabilities.
Such planning can be used to effectively coordinate your loved one’s care needs and to enhance the quality of your loved one’s life. Sometimes called a “Supplemental Needs Trusts,” Special Needs Trusts can help preserve assets to care for an individual with special needs after becoming eligible for government benefits, including Medicaid.
A Supplemental Needs Trust (frequently called a Special Needs Trust, or simply an “SNT”) is an important estate planning tool. The purpose of a Supplemental Needs Trust is to safeguard certain assets (generally a settlement or an inheritance) without disqualifying the individual from eligibility for public benefits. Understanding permissible distributions is critical to the effective administration of the Trust.
One of the duties of the Trustee of a Supplemental Needs Trust is to understand what public benefits programs might be available to the beneficiary and how the receipt of income, or a provision of food or shelter, might affect eligibility. Once the Supplemental Needs Trust is created by a qualified estate planning attorney, the Trustee has the responsibility to use the Trust funds for the benefit of the individual without violating the many complicated and often changing rules of Social Security and Medicaid.
Conceptually, the idea is that permissible distributions from the Supplemental Needs Trust must be “supplemental” to those need-based benefits being provided by the government.
As with other trusts, the trustee of a special needs trust is prohibited from self-dealing. That means no investment of trust assets in the trustee’s business or assets, no commingling of trust and personal assets, no borrowing from the trust, no purchase of goods or services (by the trust) from the trustee, and no sale of trust assets to the trustee.
Special Needs Trust Definitions
For most of my clients, discussing whether a Special Needs Trust is the appropriate strategy for them requires a basic understanding of some terms.
The following are the Special Needs Trust Definitions of the most commonly used terms: