Supplementary Needs Planning – Part 1

A crucial consideration for your comprehensive estate plan involves care for family members or loved ones with special needs. Leaving gifts to loved ones with special needs might cause unintended consequences without proper planning. Your estate plan can include a Supplementary, or Special Needs Trust (SNT) that will ensure both funding and resource management that best serve the beneficiary.

“Special needs” can include conditions such as cerebral palsy, Down syndrome or quadriplegia that require lifelong assistance from trusted caretakers. This type of assistance is expensive, especially if your loved one’s special needs require daily assistance for routine activities. Because of the sheer cost, persons with special needs often pursue public benefits programs for disability care.

Many public benefits programs have “asset limits,” which terminate or phase out benefits for a beneficiary with a specific amount of available resources such as cash or investments. For example, Medical Assistance, the most-sought public benefits program for special needs care, has an asset limit of $8,000 in Pennsylvania for some recipients. And giving away money won’t help a person avoid asset limits. Benefits programs like Medical Assistance impose “ineligibility periods” on applicants who gift their preexisting resources to meet asset limits.

Thankfully, SNTs allow you to leave resources for your loved ones with special needs while preserving their access to public benefits. Generally, if you leave more than the $8,000 asset limit to a loved one on Medical Assistance in your will, the recipient may lose their coverage. But the law excludes SNT resources from counting towards the asset limit. Resources in your SNT can fund your loved one’s needs in supplement to public benefits coverage. For example, a SNT could make mortgage or rent payments on behalf of the beneficiary. It could also purchase medical devices or household items that aren’t covered by public benefits. These supplemental funds will improve your loved one’s quality of life while maximizing public assistance.

It’s never too early to start planning for special needs. The SNT is a planning tool that empowers you to leave resources for loved ones with special needs while accounting for the complexity of benefits eligibility.