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Planning for Families With Special Needs

Wednesday, 23 December 2015

by Brendan Bybee, JD MPA



The estate planning process presents unique challenges for families who must consider how to provide an inheritance for individuals who rely upon governmental benefits to provide for medical assistance and other needs. Outright gifts to a disabled individual, or payments made directly for his or her care and support can effect eligibility for benefits such as SSI and Medicaid. The same risk is present if an inheritance from an estate or a personal injury award is distributed outright to the disabled beneficiary.

For many individuals, however, especially parents of disabled sons and daughters, the idea of disinheriting a child in order to preserve government assistance or other benefits is an unacceptable alternative. Planning for the disabled requires considering sophisticated estate planning strategies that preserve access to medical assistance and other important benefits. Supplemental or special needs trusts provide a solution.

WHAT IS A SUPPLEMENTAL OR SPECIAL NEEDS TRUST?

A Supplemental Needs Trust (or “SNT”) is a discretionary trust that can be created during your lifetime or through the provisions of your revocable living trust or will. The trustee of the SNT is empowered to use the trust property only for purposes that do not overlap with the intent and provision of public assistance programs. Trust property is available for the purchase of supplemental items not otherwise provided by and paid for by public funds such as Medicaid and SSI. The trustee can use trust funds to pay for such things as travel, recreation, training programs, education, rehabilitation, computers and medical services not otherwise provided through participation in government programs. Funds flowing from an SNT can be used to make life richer, and more comfortable for the person with special needs.

UTILIZING THE SUPPLEMENTAL NEEDS TRUST

A properly drafted SNT clearly states your intent that the trust property will only be used to supplement, and not to supplant, public benefits. These specially designed trusts are afforded protected status under state and federal law and, as such, they will not be considered property of the beneficiary. Although SNTs can be established with assets of the beneficiary, under some circumstances, an SNT established for a loved one with your assets will never be subject to Medicaid recovery (payback) and can be distributed to beneficiaries of your choosing after the primary beneficiary passes away. Implementing strategic use of an SNT in your estate plan can ensure that the inheritance you leave your disabled loved one will not interfere with their much needed benefits and that any remainder is left to bless others.

If you are an individual with a disability who currently has or is expecting to receive a sum of money or stream of income, or if you are a friend or family member of a disabled individual who is contemplating making a gift for that individual’s benefit, please do not hesitate to contact us for a free consultation to discuss how you can use a properly drafted supplemental needs trust to make that gift go further.

This information is made available by Spaulding Law for educational purposes only and not to provide legal advice. By using this website, you understand that there is no attorney-client relationship between you and Spaulding Law, unless you have entered into a separate representation agreement. This information should not be used as a substitute for competent legal advice from a licensed professional attorney.

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