A Supplemental Needs Trust (SNT)

A Supplemental Needs Trust (SNT)

A Supplemental Needs Trust (SNT) (the terms supplemental needs or special needs are used interchangeably) is an invaluable planning tool for families who are concerned about preserving eligibility for SSI, MA Health and other needs based programs while providing additional assets for the use and benefit of a family member who is challenged with a disability.

This type of planning is important for parents or grandparents that have a fear of dying with no plan in place for a child’s substantial financial and medical needs.  Fear that family resources will be exhausted on their loved ones needs.  A wish to be fair and leave an inheritance for other children, or a desire to avoid burdening other family members with financial responsibility for a disabled family member.  A special needs trust may be the answer.

There are two types of special needs trusts:

A third party supplemental needs trust

is ideal for parents or family members who are concerned about how their family assets can be distributed at their death for the benefit of their family member who has a disability. The third party SNT is funded with assets belonging to a parent, grandparent, other relative or friend of the family. As long as a third party SNT is properly drafted, funded and administered, there is no payback to the state for the cost of care and the funds in this type of trust can pass to named beneficiaries – often other family members or charities.

A first party or self funded special needs trust

is funded with assets that belong to the individual who has a disability. Any funds the special needs family member owns or has a legal right to can be irrevocably assigned to a first party SNT, and the beneficiary of the trust will remain eligible for needs based benefits or become eligible immediately with no look back period. Excess assets that would normally disqualify an individual from receiving SSI or Medicaid eligibility can be transferred to a first party special needs trust. The trust can be used throughout the individual’s lifetime for his or her supplemental needs, but upon his or her death, any state which has provided Medicaid funding must be able to reimburse itself for any Medicaid funds paid for his or her benefit during the individual’s lifetime. Examples of funds or assets that can be transferred or irrevocably assigned to a first party special needs trust include personal injury settlement funds, child support, UTMA accounts or other savings or windfall received by a person with a disability.

Attorney Kasberg can assist you with planning for your special needs family member.  Schedule a free no obligation consultation to learn more about this process.