Sometimes referred to as a supplemental needs trust, a
Special Needs Trusts (SNT) may be created to benefit a family member or close
friend who has a disability. The trust
is set up for a person with special needs to supplement any benefits the person
with special needs may receive from government programs. Any funds in a SNT
will not be counted for purposes of qualifying and maintaining eligibility for
certain governmental benefits programs. Governmental programs that require the
protection of a special needs trust such as Supplemental Security Income,
Medicaid, and Veterans Benefits, are needs-based programs and the person who
you want to provide for may be disqualified from these programs if the person
held the assets or funds directly.
Programs like SSI and Medicaid only meet basic needs such as
food and housing. The SNT can give the means to provide the disabled person
with an enhanced quality of life. The trust pays for supplemental and extra
care over and above what the government will pay. The trust funds are disbursed
to third parties who provide goods and services for use and enjoyment by the
disabled person. The person who manages the trust assets, called the trustee,
is able to purchase things like a phone, a computer and electronics, a
television, a vehicle, cable and internet services, clothing, tuition, books,
travel, entertainment, household furnishings and furniture, special accommodations
for housing, and other items that allow the beneficiary a richer life.
If the trust is funded during the lifetime of the person who
established the trust, it is effective immediately, and other family members,
including grandparents, aunts, uncles, brothers, sisters, or friends can give
money to the trust either by writing a check or by naming the trust as a
beneficiary in their will. A parent of a disabled child may also choose to
purchase a life insurance policy payable to the trust.
The person making the trust may attach an optional letter of
intent, which is a letter expressing their wishes on how the funds should be
used, along with special notes about the disabled person’s preferences.
The trust is beneficial to families and friends of disabled
people receiving government benefits who want to enhance that person’s quality
of life. Even if a disabled person is not currently receiving government
benefits, the trust protects public benefit eligibility in the future or offers
a way to assist in managing the assets of a special needs person.
Written by Heather W. Winter, Esquire
