In Perspectives

Are you caring for someone that was born with a disability, or a person that has been injured in an accident and requires some extra care? Is there someone in your life that will need ongoing assistance that you would like to help provide for? If you have answered yes to any of these questions, a supplemental needs trust, sometimes referred to as a special needs trust, may be right for you and your loved one.

What is a Supplemental Needs Trust?

A Supplemental Needs Trust is a document that forms a legal entity to hold assets to be used for a person’s care (the “beneficiary”). A Supplemental Needs Trust is created for two primary purposes: (1) Protect the beneficiary’s eligibility for means-tested public programs (i.e. Medicaid or SSI), and/or (2) Provide for the financial care and oversight for the beneficiary after his or her primary caregiver is no longer able to provide for him or her.

How is a Supplemental Needs Trust different from other types of trusts?

If the primary purpose of the Supplemental Needs Trust is to preserve eligibility for government benefits for the beneficiary, the Supplemental Needs Trust must use very specific language to ensure assets held by it are not considered part of the beneficiary’s personal assets. If this specific language is not used, the assets in the Supplemental Needs Trust may disqualify the beneficiary for certain government benefits (e.g. Medicaid, SSI). An attorney that knows and understands the specific requirements should draft a Supplemental Needs Trust – Legacy Trust can provide you with recommendations if needed.

If the primary purpose is to provide for the support, care, and maintenance of the beneficiary, without regard to benefits eligibility, then the language can be directed towards just those purposes. Where most trusts leave the assets to beneficiaries with little to no restriction on the use, a Supplemental Needs Trust can direct the trustee to use the assets for specific purposes. For example, the Supplemental Needs Trust can instruct the trustee to use the assets to provide for housing for the beneficiary, or to hire individuals to drive the person to daily appointments or activities, to hire someone to attend an IEP and be an advocate for the beneficiary, or provide in-home assistance. Legacy Trust can put you or your loved one in contact with people who can help with these and many other services.

How to setup a Supplemental Needs Trust

Anyone that wants to provide for a person’s future care can establish a Supplemental Needs Trust. Most commonly it is the parent(s) or guardian(s) of the person to be benefitted, but that is not always the case. Many times other family members create a Supplemental Needs Trust, or state in their estate planning documents that one is to be created up on their death to benefit a sibling, niece/nephew, or grandchild. Funding can be from cash on hand, an annuity, a retirement account, life insurance, or a variety of other options. If you are interested in establishing a Supplemental Needs Trust, contact Legacy Trust to find out how or discuss options.

If you have questions about any of this, we invite you to contact our office today for more information. A Legacy Trust team member can talk to you more about what we do and how we might be able to help you with a Supplemental Needs Trust, a regular trust, asset management, or retirement assets.