Supplemental Needs Trust – A Wonderful Planning Opportunity for Persons Living with Disabilities

According to the US Census Bureau, over 27% of the U.S. population is under some form of disability. Many of these people rely on means-tested public benefits (i.e., benefits with financial hardship requirements), and the number of Americans living with disabilities is expected to increase as the population ages. The need for specialized planning for these individuals is rapidly growing.

One issue faced by many persons living with disabilities arises when they come into a sum of money from an inheritance or lawsuit/settlement. These new assets can often cause them to lose vitally important means-tested benefits. A supplemental needs trust (SNT) is a tool used to preserve governmental benefits while providing a source of funds that provide for supplemental needs not covered by government assistance. This includes a wide array of goods/services, from adaptive aids and caregiver expenses to transportation and even vacations. An SNT allows these funds, managed by another person (the “trustee”), to be made available to the individual living with disabilities while not being treated as a resource that would otherwise disqualify them from public benefits.

Parents including supplemental needs trusts in their wills can allow a child living with disabilities to inherit assets without losing necessary benefits like SSI and Medicaid. This type of SNT is called a “third party SNT” because it is funded by the assets of someone other than the person living with disabilities. If certain key requirements are met, the person living with disabilities can even create a “self-settled” SNT using their own funds. However, self-settled SNT’s must have a provision to pay back the State for benefits received during that person’s lifetime, while third-party SNT’s are not required to have a “pay-back provision” -- so using the right type of trust is key.

It is best to consult with an attorney specializing in elder or disability law to ensure that a new SNT is appropriate for each individual’s unique circumstances. But supplemental needs trusts provide persons living with disabilities and their loved ones a wonderful opportunity to improve quality of life while maintaining eligibility for public benefits.

Brennen Boze

Attorney

Law Offices of Carol Bertsch

8703 Broadway

San Antonio, TX 78217

Ph: 210-672-7034