A Special Needs Trust (SNT), also known as a Supplemental Needs Trust, is an irrevocable trust designed to manage and protect assets for the benefit of an individual with disabilities, without jeopardizing their eligibility for government assistance programs like Medicaid and Supplemental Security Income (SSI).

Special Needs Trusts are generally established for some or all of the following reasons:

• Preservation of Government Benefits: Many individuals with disabilities rely on government benefit programs such as Supplemental Security Income (SSI) and Medicaid for financial assistance. These programs often have strict asset and income limits. A properly structured SNT allows the beneficiary to receive financial assistance without jeopardizing their eligibility for these means-tested benefits.
• Enhanced Quality of Life: SNTs can be used to enhance the beneficiary’s quality of life by providing funds for a wide range of goods and services not covered by government benefits. This can include medical expenses not covered by Medicaid, therapies, education, assistive technology, transportation, and recreational activities.
• Housing: SNT funds can be used to pay for housing-related expenses, including home modifications to accommodate the beneficiary’s disability, rent, mortgage payments, property taxes, and utilities.
• Education: Special Needs Trusts can fund educational expenses, including tuition, books, supplies, and specialized educational services.
• Transportation: Funds from the trust can be used for the purchase of accessible vehicles, transportation services, or modifications to existing vehicles to accommodate the beneficiary’s mobility needs.
• Medical and Dental Expenses: SNT funds can cover medical and dental costs not fully covered by government programs, including co-pays, deductibles, and specialized treatments.
• Personal Care Attendants: SNTs can pay for the services of personal care attendants or caregivers to assist the beneficiary with daily living activities.
• Estate Planning: In some cases, SNTs are established within the estate planning process to provide for a loved one with a disability after the grantor’s death. For parents and family members, establishing an SNT can provide peace of mind knowing that their loved one with special needs will have financial security and access to necessary care and services.
• Protection from Creditors: SNTs can offer protection from creditors, ensuring that the trust assets are used for the beneficiary’s benefit rather than being subject to potential creditor claims.

Important Considerations When Establishing a Special Needs Trust

• Legal Expertise and State-Specific Knowledge: Laws and regulations regarding means-tested benefits can vary significantly from state to state. An attorney with expertise in special needs planning and who is well-versed in the specific rules of your state is essential to ensure your trust aligns with state guidelines.
• Letter of Intent: A letter of intent is a non-legal document that provides important guidance to caregivers and trustees about the wishes and preferences of the individual with special needs. While not legally binding, it can be a valuable tool for ensuring that the beneficiary’s needs and desires are understood and respected.
• Professional Trustees: Depending on the size and complexity of the special needs trust, you may consider appointing a professional trustee or trust company. They have experience in managing trusts and can ensure that the trust assets are used appropriately.
• Naming Trust Protector(s): Consider appointing a trust protector, a non-fiduciary role, responsible for various duties outlined in the trust agreement. The trust protector can have the power to remove a trustee, appoint a new trustee, or make other important decisions.

To learn more about Special Needs Trusts, see our article Special Needs Trusts: Ensuring Financial Security for Individuals with Disabilities

Have questions or would like more information? Our team is here to help.

Note: The information provided here is for general educational and informational purposes only. It is not legal advice and should not be interpreted as such. For a thorough understanding of these topics relevant to your specific circumstances, we recommend consulting a qualified estate planning attorney. Peak Trust Company cannot provide legal advice; however, we can serve as an informational resource and provide referrals to highly skilled attorneys who can offer legal and tax guidance tailored to your specific needs.