A supplemental needs trust, or SNT, is a very specialized type of trust that is intended to be created to help with the financial needs of a physically or mentally disabled individual or someone with a chronic illness. Assets held by an SNT may be used to cover expenses that are not covered by government funded programs like Medicaid, public housing or Supplemental Security Income. In many ways, a SNT operates just like any other trust; however, there are important distinctions. If you have a family member who is disabled or suffers from a chronic illness, you may not have considered creating a SNT based on your belief that you are able to cover the costs associated with your family member’s care yourself and therefore no need exists for a SNT. Although this may be the case, there are still a number of reasons why you may wish to consider creating an SNT.
The government programs that are available to your family member are there to help. They are available to all who qualify even if the applicant is from a family that is financially comfortable. A properly drafted SNT will not prevent your loved one from qualifying for government funded assistance.
Assets held in an SNT are also protected from a beneficiary's creditors or liabilities. In other words, if someone sues your loved one, the assets held in the trust cannot be touched which prevents your loved one from being an easy target for fraudulent lawsuits. Your finances could take a down turn in the future. By creating a SNT now, you know that your loved one will be well-taken care of regardless of your financial situation.
By creating an SNT, you will know that your loved one will be able to maintain qualification for public benefits and will be financially secure even after your death without having to depend on other family members to care for him or her. Planning for a child with special needs is highly technical and the stakes are high if a mistake is made. Even many estate planners do not have the knowledge or experience to plan in this are. Make sure that the furture of your loved one is placed in the hands of a qualified and experienced special needs planner.