When planning for a person with special needs, establishing a Supplemental Needs Trust (SNT) is often essential for ensuring that the trust beneficiary’s financial needs are met. This type of trust is primarily used to supplement government-funded benefits, such as Social Security Income (SSI) and Medicaid. When appropriately funded, an SNT uniquely safeguards the individual’s assets and government benefits.
How Does a Supplemental Needs Trust Work?
An SNT is designed to supplement, not replace, any benefits received through government programs. An SNT is a type of Special Needs Trust, also called a “d4a” SNT, which stands for disabled persons (“d”) special needs (“4”) trust (“a”). This trust structure provides financial supplementation for the beneficiary’s basic needs, such as food, clothing, and medical care, while maintaining the beneficiary’s eligibility for government benefits.
The purpose of an SNT is to hold assets and income for the beneficiary’s benefit while allowing him or her to remain eligible for government programs. The trust assets can pay for items or services that are not covered by government benefits, such as entertainment, special equipment, supplies, or outings. The trust also allows contributors—such as family members, friends, or the beneficiary himself—to contribute assets and income over the beneficiary’s lifetime.
The Importance of a Supplemental Needs Trust
Without an SNT, the assets held for the beneficiary would be subject to claims by creditors, and some of the trust assets may be considered part of the beneficiary’s estate, reducing his or her eligibility for government benefits. An SNT is a powerful tool that can help to provide for the beneficiary’s needs and preserve the trust assets for future generations.
With the help of experienced legal and financial advisors, a Supplemental Needs Trust can be designed and properly implemented to meet the trust beneficiary’s needs and preserve his or her eligibility for government programs. Doing so gives families peace of mind when planning for the long-term care of an individual with special needs.