A Supplemental Needs Trust also known as a Special Needs Trust (SNT) can be an effective estate planning tool.
The SNT enables a person, under the age of 65, with a physical or mental disability or a person with a chronic or acquired illness, to have held in trust for his or her benefit an unlimited amount of assets. The disability is determined according to certain Social Security standards. A SNT trust must be established before the person’s 65th birthday.
A SNT provides for “supplemental and extra care over and above that which the government provides.” A SNT is designed to maintain government benefit eligibility, but to bring a better quality of life to the beneficiary. There are specific rules that say what the trust funds can and cannot be used for.
The SNT can be funded by the disabled person’s own money (i.e. a first party SNT) or by money obtained from other sources (i.e. a third party SNT). Assets properly placed in a SNT are not considered countable assets for purposes of qualification for certain governmental benefits, such as Supplemental Security Income (SSI), Medicaid, subsidized housing and other benefits based upon need.
It is always wise to consult an experienced attorney regarding the use of a SNT, especially if the disabled person receives funds as a result of an accident, tort settlement, lottery winning, inheritance, lump sum payment from Social Security benefits or some other source.
A SNT can be a good option for a family with a child who has a disability.
I can help you with a SNT.