Supplementary Needs Planning – Part 2

Now that you know what a Special Needs Trust (SNT) is, it’s important to understand its specific advantages.

First, a SNT allows you to transfer unlimited assets for the benefit of your beneficiary. These assets will supplement beneficiary expenses covered by public benefits, not supplant them. That means the SNT assets will fund additional needs on top of what public benefits provide. The SNT’s language will clearly state that the funds do not replace public assistance.

The SNT assets will be managed by a trustee of your choice. In some cases, it may be advisable to hire a corporate trustee who has financial expertise and competence in managing the complex requirements for public benefits programs, as well as the ability to navigate changes in government regulations that happen down the road. In the case of a smaller SNT, on the other hand, appointing a non-profit or trusted family member might make more sense.

Your SNT will manage the types of assets that would otherwise disqualify your beneficiary from receiving public assistance. Generally, besides assets in an SNT, public assistance benefits exempt a beneficiary’s home, home furnishings, one vehicle, burial plot, limited amounts of burial funds, and small life insurance policies from asset limits. But cash, investments, larger life insurance policies, and additional real estate beyond the beneficiary’s home will trigger the asset limits. If properly transferred to an SNT, these assets won’t disqualify your beneficiary from receiving public benefits.

But there are also limits to how trustees use SNT resources for beneficiaries. Distributions to a beneficiary can risk public benefits. When planning for public assistance, it is recommendable to work with a trusted advisor who can guide you through the best practices to make sure your beneficiaries are cared for in the way you intend.