There are many decisions that come into play when planning for a disabled loved one. Some big ones are determining a caretaker or guardian, deciding on resources to use to provide a quality lifestyle, and countless financial factors. There are many discussions that need to take place to address all of these concerns. Often families are most troubled with the financial decisions and deciding what to do with their money to support disabled loved ones over their lifetime. One solution that can help is a Special or Supplemental Needs Trust (SNT).
A SNT is established to hold and protect assets for the benefit of a disabled beneficiary. The main benefit is to be able to provide a beneficiary support and pay for supplemental needs that are not covered by government assistance programs without disqualifying them from those programs. Many programs like Supplemental Security Income (SSI) and Medicaid for healthcare have a limit on the amount of assets that can be owned by a disabled individual. Assets greater than $2,000 can disqualify an individual from these government benefits. Fortunately, a SNT protects the assets and does not subject them to these rules.
While the protection of these benefits is the primary advantage of a SNT, there are many other reasons to create one. When you set up a SNT, you elect a trustee to oversee and invest the trust assets as well as make decisions on distributing the assets according to the intentions in the trust document. Most often, the parents of the disabled individual will be the trustees, but it is important to name a successor trustee who can oversee the trust if the parents predecease the beneficiary. Also, assets within the trust are protected from claims of creditors like other trusts are.
Establishing a SNT depends on the individual circumstances of each family. They require a good bit of administrative and legal work, so it is important to coordinate with your financial planner and estate planning attorney prior to determining if a SNT is right for you.