A Special Needs Trust (SNT), also known as a Supplemental Needs Trust, provides financial support and protection for individuals with disabilities or special needs. The primary purpose of a Special Needs Trust is to enhance the quality of life for the person with a disability without jeopardizing their eligibility for government assistance programs.
The key features of a Special Needs Trust are:
Preservation of Government Benefits: Many individuals with special needs rely on government benefits such as Supplemental Security Income (SSI) or Medicaid. These programs often have strict income and asset limits. A Special Needs Trust allows a person to receive additional financial support without affecting their eligibility for these essential benefits.
Third-Party Trusts vs. First-Party Trusts: There are different types of Special Needs Trusts. A third-party trust is funded with assets that do not belong to the individual with special needs (e.g., contributions from family members). In contrast, a first-party trust is funded with the individual's own assets, often as a result of a legal settlement or inheritance.
Trustee: A Special Needs Trust typically has a trustee who manages the trust assets and makes distributions according to the terms specified in the trust document. The trustee is often someone the individual with special needs and their family trust to act in their best interest.
Permissible Distributions: The trust document outlines the permissible and impermissible uses of trust funds. Generally, the trustee can use the funds to supplement the individual's needs not covered by government assistance programs, such as education, transportation, recreation, and personal care.
Flexibility: Special Needs Trusts offer flexibility in how the funds can be used, allowing for customization based on the individual's unique needs and circumstances.
Creating a Special Needs Trust requires careful consideration of legal and financial implications. We can help you to ensure that the trust is properly established and meets the specific needs of your loved one.
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