When someone suffers from a physical or mental disability, they may be eligible for state and federal benefits. Many benefit programs, however, are “need based,” which means the individual is prohibited from having too much income or too many assets. The asset limitations can often be as low as $2,000, which means that even the smallest, well-meaning gifts or bequests from family members to the disabled individual can have dire consequences for that individual’s care.
To avoid an inadvertent disqualification, any gifts or bequests to the disabled individual should be made to a Supplemental Needs Trust (SNT) which names the disabled individual as the beneficiary, but allows an independent trustee to determine exactly how and when money is spent on the beneficiary’s behalf. The funds and assets in the SNT can be used to pay for additional services or care which are not covered by the benefit programs. These services and care can include:
• Training and rehabilitation programs
• Specialized equipment
• Medical expenses
• Home health aide expenses
• Items and possessions to enhance quality of life.
An SNT can hold most types of assets, and can even be the beneficiary of a life insurance policy. The most important thing to remember, however, is that an SNT should be drafted in advance to ensure it accomplishes the desires of the person funding the trust and meets the needs of the disabled beneficiary.
If you have any questions about Supplemental Needs Trusts, would like to gift money to someone with a disability, or would like to discuss other estate planning questions, contact us at firstname.lastname@example.org or 413-570-3170.