In our last blog post, we mentioned that a trust can provide an element of control that a will cannot (see reason number 2). A Special Needs Trust (SNT) is a perfect example of this. An SNT is an estate planning tool that you can use to both provide for a loved one with a disability, and control how and when money is spent for his or her benefit.
There are two types of SNTs: a General Support SNT and a Supplemental Care SNT. A General Support SNT is designed to serve as the primary source of benefits for the beneficiary. Contrastingly, a Supplemental Care SNT, very aptly named, is designed to provide secondary benefits to those already provided by government-based resources.
So, the big question becomes: Which SNT is right for you?
If the assets funding the SNT are large enough (i.e. high enough in monetary value) to provide for your loved one’s care for the rest of his or her life, then a General Support SNT may be sufficient. A General Support SNT, however, will be considered an available resource for the disabled beneficiary, which will likely preclude his or her eligibility for governmental programs.
The more common choice is the Supplemental Care SNT.
Some government-based assistance programs come with eligibility requirements. Take, for example, Social Security Income (SSI). In order to be eligible for SSI, a person must have (among other things) limited income and limited resources. Other programs include Medicaid, Medical, etc.
Limited income and limited resources. The more resources and income available to the person with a disability, the less likely it is that he or she will be eligible for government assistance. If the assets funding the SNT are not sufficient to cover the support that your loved one will need (the majority of situations), you will want to maximize the governmental assistance available in order to stretch the trust assets farther. Keep in mind that many things are not covered by government assistance, including supervision (sitters) and dental care.
A properly drafted Supplemental Care SNT will provide for the needs of the beneficiary that are not fully funded by government programs, and will not supplant the benefits provided by the government.
When it comes to forming your Special Needs Trust, be sure to carefully review your options so that your loved one receives the care that he or she needs.