A special needs trust (SNT) is a specific financial vehicle that can provide for a loved one or relative who has long-term special needs and may need to qualify for public assistance. We dive into some of the initial details of this type of trust below.
How to Know if a Special Needs Trust is Right For My Situation
First, a determination needs to be made to understand if there are enough financial assets to make opening an SNT worth it. If there are, the next step is to decide if the beneficiary has the capabilities to manage those assets either now or potentially at a later point in time. If he or she may not be able to, then the trustee could manage the assets on his or her behalf, and the person creating the trust could decide allocations, disbursements, and other rules of the trust.
Maintaining Public Assistance Eligibility
One of the main reasons anyone sets up an SNT is to protect the beneficiary’s financial eligibility for public assistance while also giving him or her additional resources. Medicaid requires that the applicant does not have more than $2,000 in personal assets, but assets in an SNT do not count towards that total. Similar rules apply for Social Security Disability Insurance, and it’s important to speak with a qualified trust attorney to understand best how to set up this instrument.
How a Special Needs Trust is Different From Other Trusts
An SNT comes in many different forms, although the primary one is a “third-party SNT,” which parents typically use to establish a trust for their loved one (typically a child, but could be a grandchild, cousin, or another relative). The trust isn’t created by the beneficiary or his/her spouse and specifically holds assets meant for the beneficiary, but not the beneficiary’s own assets.
Essentially, the trustee maintains control of the assets through the trust, which makes a specific delineation for the Social Security Administration. An SNT typically sets up specific rules for the beneficiary and some other key language to show that there is a clear asset separation and that all financial allocation decisions are in the trustee’s hands.
SNTs can get very complicated, very quickly, and require a qualified estate planning attorney’s guidance to ensure that these specific guidelines and rules are met and maintained. Arkansas clients looking to plan for their loved ones trust Natural State Law to help build, maintain, and modify special needs trusts, especially as the public assistance system becomes more complicated. Call (501) 916-2878 today to learn more.