Supplemental Needs Trusts explained
Supplemental Needs Trusts (SNTs) are intended to supplement a disabled individual’s governmental benefits so that the benefits become a floor, rather, than a ceiling, for the individual.
This helps the disabled individual achieve a better quality of life and attain a standard of living above the poverty level. Such trusts, when properly drafted, prevent a court from invading the trust corpus to supplant governmental benefits.
There are first-party SNTs (funded with assets owned by the disabled individual) and third-party SNTs (funded with assets not owned by the disabled individual).
First-party SNTs require the assets in the trust be used for the sole benefit of the disabled individual and require a payback provision so that assets remaining in the trust, upon death or other termination, be used, first, to payback Medicaid.
Third-party SNTs do not require the assets in the trust be used solely for the benefit of the disabled individual and do not require such a payback provision. Third-party SNTs may use the grantor’s social security number or acquire a separate tax identification number for tax purposes.
First-party SNTs must be irrevocable. First-party SNTs may use the disabled individual’s Social Security number or acquire a separate tax identification number for tax purposes.
Pooled trusts may also be appropriate.
Every situation is unique and all facts and circumstances need to be reviewed to determine what may work in any given situation. Let's chat about what your needs are!