Proper Handling of Supplemental Needs Trusts
One of the most important aspects of working with disabled clients is helping them preserve funds for the long-term improvement of their quality of life. With your help, families can rest assured that their loved ones are well taken care of for the rest of their life.
A Supplemental Needs Trust (SNT) is the key to protecting funds without jeopardizing public benefits. The funds in the trust are allocated appropriately for the supplemental care of the disabled individual (beneficiary) for life. If the trust is set up correctly, the beneficiary will not risk losing eligibility for government benefits.
Categories of Supplemental Needs Trusts
An SNT can be either self-settled or a third-party trust. To qualify, an individual must be Supplemental Security Income (SSI) and Medicaid eligible and be considered disabled by definition of Social Security Disability.
A self-settled trust is for disabled individuals under the age of 65 with and is funded with the individual’s own assets. Upon the individual’s death, Medicaid is to be reimbursed and any remaining balance will be distributed to designated beneficiaries.
A third-party trust is funded by someone other than the beneficiary. Once established, the funds aren’t considered as countable assets for Medicaid purposes. These funds can pay for comforts and luxuries in which public assistance funds cannot pay for. Upon the death of the beneficiary, the remaining funds can be distributed to their designees.
SNT Be Terminated?
A trust is irrevocable once established but will be terminated upon the death of the primary beneficiary or if there is a change in law or eligibility for benefits. Additionally, termination can occur if the primary beneficiary’s condition improves and SSI or Medicaid assistance is no longer needed or if the trust no longer holds sufficient funds in comparison to the cost of administration.
The trustee of an SNT can be a bank, lawyer, or family member, and more than one person can serve as trustee. The trustee(s) manages and administers the trust provisions and is held to a high standard of conduct as they carry out their duties. They must put the best interest of the beneficiary first at all times.
Protecting Both the Client and Government Benefits
Very sensitive issues are involved when applying for governmental benefits and programs. Without careful planning and forethought, the well-intentions of loved ones or the inexperience of an attorney can prove disastrous where a disabled person’s benefits are concerned. Partnering with a firm such as Synergy Settlement Solutions can help you ensure that your client’s SNT is properly administered.
For more information or to schedule a consultation, please submit our contact request form or call (877) 242-0022.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.