A Supplemental Needs, or Special Needs Trust, is a distinct kind of trust which holds title to property for the benefit of a child or adult who has a disability. The funds in the trust can be used to supplement benefits received from various governmental assistance programs including SSI and Medicaid, so the trust assets do not count against the beneficiary’s resources or assets.
A Special Needs Trust (SNT) is part of a comprehensive long term care plan for those with loved ones who suffer from a disability. A SNT trustee cannot give money directly to your loved one; that could interfere with eligibility for SSI and Medicaid. The trustee can spend trust assets to buy a wide variety of goods and services for your loved one. Special needs trust funds are commonly used to pay for personal care attendants, vacations, home furnishings, out-of-pocket medical and dental expenses, education, recreation, vehicles, and physical rehabilitation.
Special Needs Trusts became important in 1993, when Congress closed a loophole that allowed anyone to create a trust to hold assets and property, thus exempting those assets from being included in calculations for Medicaid and Social Security Insurance payments. Now, a trust must meet certain requirements to be exempt from 42 U.S.C. Sec. 1396p(d)(4)(A). The requirements for a Special Needs Trust that is exempt under 42 U.S.C. Sec. 1396p(d)(4)(A) include:
- The trust beneficiary must be an individual under the age of 65 who qualifies as “disabled”
- The trust must be established by a parent, grandparent, guardian, or court
- The trust must provide that at the individual’s death, the State is repaid for the Medicaid services that it has provided during the individual’s life
- The trust must be established by a Parent, Grandparent, guardian or the court, but funded with the money or resources belonging to the beneficiary.
A Special Needs Trust (SNT) can help maintain individual eligibility for government programs like SSI and Medicaid, and help pay for services and care over and above what the government provides. The funds used to create a SNT are tax-deductible. Creation of a SNT ensures that funds are used for the care of the person with a disability. A well written SNT provides for vastly superior care options and opportunities for treatment and rehabilitation, housing, electronic equipment, computers, job training, vacations, as well as supplemental items that will enhance dignity, productivity and comfort of the disabled loved one.
Deciding how to handle your disabled loved one’s financial future can be difficult, but having the right information and consulting with the experienced attorneys of Christopher B Johnson Law can go a long way to ease your mind.