Supplemental Needs Trusts
Friday, July 9th, 2010
What is a SNT?
A Supplemental Needs Trust is also known as a Special Needs Trust or SNT. It is a specialized legal document that can stand by itself or be part of an overall estate plan involving wills or other trusts. A SNT enables your developmentally disabled child to have an unlimited amount of assets held in Trust for his or her benefit. In a properly drafted Supplemental Needs Trust, those assets are not considered assets for the purpose of qualifying for certain governmental benefits.
Why is it important to have a SNT?
The Supplemental Needs Trust is designed to:
• provide benefits to, and protect the assets of, your developmentally disabled child;
• receive an inheritance on behalf of your developmentally disabled child;
• enable your child to have unlimited assets held in trust for his or her benefit which are not considered assets for the purpose of qualifying for certain government benefits, such as Medicaid and the HCBS Waiver, Supplemental Security Income (SSI), and other need-based government benefits; and
• provide supplemental benefits and extra care over and above what the government may provide.
The SNT is not designed to provide basic support, but instead to pay for comforts and luxuries that could not be paid for by public assistance funds. These trusts typically pay for expenses related to education, recreation, counseling, and medical attention beyond the simple necessities of life. Special needs can include medical and dental expenses, annual independent check-ups, necessary or desirable equipment, training and education, insurance, transportation, and essential dietary needs. If the trust is sufficiently funded, the disabled person can also receive spending money, electronic equipment and appliances, computers, vacations, movies, payments for a companion, and other self-esteem and quality-of-life enhancing expenses.
Other types of Spendthrift or Family Trusts are not appropriate for your developmentally disabled child because they do not address the specific needs of his or her future lifestyle. Even if your family has significant resources to help your developmentally disabled child, a Supplemental Needs Trust should be established to address these issues.
Additionally, funds in the SNT are not subject to creditors or seizure. Therefore, if your child should ever be sued in a personal injury or other type of lawsuit, funds placed in the SNT are not subject to a judgment.
When should I create a SNT?
A Supplemental Needs Trust can be established at any time before your child’s 65th birthday. It is very common to create a SNT early in a child’s life as a long term means for holding assets to benefit him or her. This is particularly true of parents who wish to leave funds for a child’s benefit after the parents’ death. The SNT is the estate-planning tool of choice for those parents. As a part of estate planning, the costs of the creation of the trust are tax deductible.
Additionally, your developmentally disabled child may at some time during his or her lifetime come into funds from third party sources, such as a personal injury settlement or a bequest from relatives or friends, Social Security back payments, insurance proceeds, etc., which could be placed in the trust to benefit him or her in the future.
Can any attorney create a Supplemental Needs Trust (SNT)?
Not just any attorney with knowledge of trusts can protect your child’s public benefits. If proper language is not used, the trust can easily be invalidated, or cause a loss of benefits, savings or other financial and legal hardships. An attorney specializing in special needs issues can save your family thousands of dollars.
Only an attorney who has expertise in special needs estate planning can customize the trust to your child’s needs. In this way, your child will continue to receive the benefits that you are currently providing when you are gone.
The legal team at The Jones Law Firm, P.A. provides estate planning services, and specifically, Supplemental Needs Trusts, to families in the greater Kansas City metro area. We understand the importance of the creation of such a trust and will work with you to ensure your special needs child is protected now and in the future. What else should I know? We invite you to contact us with any questions you may have regarding special needs trusts or if you think a special needs trust is right for you. We provide free initial consultations.