Hyden, Miron & Foster, PLLC Law Blog

Thursday, August 20, 2020

What Is a Supplemental Needs Trust?

Many people are not aware of trusts or the important role they can play in estate planning. The types and purposes of trusts are varied and can provide you and your loved ones with many benefits when properly employed. For instance, you may have a loved one with special needs that you worry about providing for. A supplemental needs trust may be the answer to many of your concerns.

What is a Supplemental Needs Trust?

A supplemental trust can play a critical role in planning for the continued care for a disabled child. There is an added complexity in providing for a loved one with special needs because they may be dependent on financial need-based government assistance. This means that giving them money or assets outright could jeopardize their continued receipt of the government benefits they rely upon. Supplemental needs trusts account for this. When properly drafted and employed, funds in a supplemental needs trust will not be considered as belonging to the beneficiary when his or her eligibility for public benefits is being determined.

Supplemental needs proceeds do not complicate the continued receipt of government benefits for the special needs individual for two central reasons. One, the special needs individual has no control over the terms of the trust and has no authority to authorize access to trust funds. These powers lie solely with the trustee tasked to manage the trust according to its terms. The second reason is the fact that a supplemental needs trust is not intended to replace public benefits, which are intended to cover the main costs of living of those that receive them. Instead, a supplemental needs trust provides “supplemental” financial support to the beneficiary. While public benefits provide basic support, supplemental needs trust can pay for things such as education, recreation, entertainment, medical attention beyond basic necessities of life, and counseling services.

You can establish a supplemental needs trust during your lifetime or set it up as a testamentary trust. Stated otherwise, you have the option of establishing the trust while you are still alive. In the alternative, you can set it up so that it only takes effect when you die. The testamentary trust route is often popular for those who have children with special needs. Giving the disabled child an outright inheritance would threaten continued eligibility for government benefits. So, establishing a supplemental needs trust that is funded by estate assets is an alternative that allows a person to provide an inheritance to a special needs child without jeopardizing receipt of government benefits.

Estate Planning Attorneys

If you have a loved one with special needs, now is the time to look into options such as a supplemental needs trust. Your estate plan can be tailored to the specific needs of your family and your unique circumstances, but the time to do so is now. At Hyden, Miron & Foster, we provide personalized estate planning services to establish plans that reflect the fact that every person has a different story. Contact us today.

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