Protecting Your Loved One's Benefits: The Power of Supplemental Needs Trusts (SNT)

For families with a loved one who relies on government benefits like Medicaid or Supplemental Security Income (SSI), estate planning takes on an added layer of complexity. While you want to provide financial support, an unexpected inheritance or settlement could inadvertently disqualify your loved one from these crucial benefits. Fortunately, there's a powerful tool that can help: the Supplemental Needs Trust (SNT), also known as a Special Needs Trust.

Understanding the Challenge

Government programs like Medicaid and SSI are means-tested, meaning recipients must have limited income and assets to qualify. A sudden influx of money from an inheritance or legal settlement could push your loved one over these limits, resulting in a loss of benefits that are often essential for their care and quality of life.

The Supplemental Needs Trust Solution

An SNT allows you to set aside funds for your loved one's benefit without jeopardizing their eligibility for government assistance. Here's how it works:

1. Asset Protection: Assets placed in the SNT are not counted when determining eligibility for means-tested benefits.

2. Supplemental Support: The trust can pay for needs not covered by government benefits, enhancing your loved one's quality of life.

3. Professional Management: A trustee manages the funds, ensuring they're used appropriately and in compliance with regulations.

Types of Supplemental Needs Trusts

There are two main types of SNTs to consider:

Third-Party SNT

- Funded by someone other than the beneficiary (e.g., parents, grandparents)

- Can be revocable or irrevocable

- No Medicaid payback requirement upon the beneficiary's death

First-Party SNT

- Funded with the beneficiary's own assets (e.g., from a settlement)

- Must be irrevocable

- Requires a Medicaid payback provision upon the beneficiary's death

Key Benefits of Supplemental Needs Trusts

·         Preserves Benefits: Maintains eligibility for crucial government assistance programs.

·         Enhances Quality of Life: Provides funds for extras that government benefits don't cover.

·         Flexibility: Can be tailored to meet the specific needs of your loved one.

·         Peace of Mind: Ensures your loved one is cared for even after you're gone.

Setting Up an SNT: What You Need to Know

Creating an SNT requires careful planning and expert guidance. Here are some important considerations:

1. Choose the Right Trustee: Select someone who understands the complexities of managing an SNT and can make decisions in the beneficiary's best interest.

2. Clearly Define Trust Purpose: Specify how the funds should be used to supplement, not replace, government benefits.

3. Consider a Professional Trustee: For larger trusts or complex situations, a professional trustee may be advisable.

4. Stay Informed: Regulations surrounding SNTs can change, so it's important to work with an attorney who specializes in this area of law.

Take Action to Protect Your Loved One

If you have a family member with special needs who relies on government benefits, don't leave their future to chance. A well-crafted Supplemental Needs Trust can provide the financial support they need while preserving their essential benefits.

At Sammartino & Sultan, we specialize in creating comprehensive estate plans that address the unique needs of families with disabled loved ones. Contact us today to learn how we can help you set up a Supplemental Needs Trust and ensure your loved one's long-term security and quality of life. Reach us to schedule a meeting.

Remember, proper planning today can make all the difference in your loved one's tomorrow. Don't wait until it's too late – take the first step towards protecting their future now.

About the Author

Christina has been practicing law in New York State, for over 7 years. She is a Pace University School of Law graduate. After passing the New York and New Jersey Bar Exams, she went on to work for several law firms with primary practice areas in Real Estate, Estate Planning, Estate Administrations, Guardianship proceedings under Article 81 of the Mental Hygiene Law, and Article 17A, Medicaid planning and applications. Christina is also certified as a Guardian, Court Evaluator, and Attorney for the AIP under Part 36 of the Rules of the Chief Judge.