by Douglas L. Kaune, Esquire
A special needs trust (SNT) (or special needs trust provision in a Will or in another trust) is an important planning option if you are considering a significant gift to a beneficiary who is considered “disabled” or “incapacitated” and either has or is likely to qualify for government benefits such as social security disability (SSI) or Medicaid. Generally, the SNT or Supplemental Needs Trust is intended to supplement the government benefits at the sole and absolute discretion of the named Trustee, but you can review this link for some more indepth discussion of the trust options.
The SNT frequently comes under attack by the government entity providing the benefit. It may be argued that the SNT should be expended for the care of the beneficiary and the government benefits be suspended until the Trust fund is exhausted. It is our job to make sure that your Special Needs Trust stands up to the scrutiny. One planning tip is naming multiple income beneficiaries, not just the “disabled” or “incapacitated” beneficiary. This allows us to argue that the trust is not just for the beneficiary receiving the SSI, Medicaid or other benefit, but is also for these additional income beneficiaries. Therefore, a complete expenditure of trust assets would be considered to “injure” the income beneficiaries and increases the likelihood that the SNT remains intact to supplement the needs of the intended beneficiary for his or her lifetime. This is just one of many strategies we employ to increase the success of these trusts. We will be reviewing others in the weeks to come. Please call or email me for further discussion on this and other estate planning topics.