Improving the Supplemental or Special Needs Trust

In December 2016, shortly before leaving office, President Obama signed into law the Special Needs Trust Fairness Act, which amended the Social Security Act in a way that is very important to people living with disabilities.

Disabled individuals are often recipients of government benefits that can make the difference in allowing the individual to lead a fuller, more independent life. However, most benefits like these are “needs-based” or “means-tested.” In other words, an award from a lawsuit or a small inheritance could result in the loss of these benefits. Since 1993, the Social Security Act has allowed such funds to be placed into a Supplemental (or Special) Needs Trust (SNT) and then spent on behalf of the individual with disabilities in order to enhance their care by supplementing (but not supplanting) the government benefits.

However, the statute that originally authorized SNTs also required that the trust had to be established by “a parent, grandparent, legal guardian of the individual, or a court,” forcing disabled individuals to rely on people other than themselves, when that might not otherwise be necessary. The two word change that was signed into law in December adds “the individual” to the list of people who are able to create an SNT. The result is that clients, when they are otherwise competent, are now explicitly allowed to create these trusts on their own behalf, without having to involve parents or other family members.

If you are in need of legal advice regarding Supplementary or Special Needs Trusts or another type of trust, Gove Law Office is here to answer your questions. We handle a wide variety of legal needs, including estate planning and administration. For further information, please contact Attorney Michael Gove at mgove@govelawoffice.com or 413-583-5196.

Use Supplemental Needs Trusts to Ensure Benefits Are Not Lost

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:

• Transportation
• Training and rehabilitation programs
• Specialized equipment
• Medical expenses
• Entertainment
• 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 mgove@govelawoffice.com or 413-570-3170.