Special Needs Trust (“SNT”) for children with special needs:

People with disabilities rely heavily on government programs such as Supplemental Security Income (SSI) and Medicaid as they provide cash benefits and important medical coverage and long-term support and services these individuals require.  However, in order to qualify for benefits, the income level and financial resources of an individual with a disability, or family applying on behalf of a child with a disability, must not exceed certain levels set by the government.  In most cases, recipients are allowed to retain only $2,000 in assets and accumulating more (such as an inheritance or gift) can cause loss of the benefits, some of which can never be qualified for again.

Government cash benefits provided by these programs cover only the bare necessities: food, shelter, and clothing.  As we all know, many other things and activities are required for a comfortable and happy life.  For parents planning for the future of a child with special needs, this poses a problem.  When parents are able to care for their child, they provide these extras to make their child's life comfortable.  Who will provide those resources when they are not there to do so?  If the parents leave assets to a child receiving government benefits, they run the risk of disqualifying the child from receiving those benefits.  But, if they leave assets to another family member or other person for the care of the child, they open themselves to the risk that the child might not get the benefit of those assets due to divorce, bankruptcy, lawsuits, and financial mismanagement.

SNTs were created by the government to allow assets to be held in trust for individuals that are eligible to receive SSI, Medicaid or other governmental benefits, providing certain parameters are met.  Because the government benefits provide for food, clothing, and shelter, the SNT must be designed specifically to supplement government benefits. Money from the trust cannot be distributed directly to the person with a disability. Instead, it must be distributed to third parties to pay for goods and services to be used by the person with a disability.

Properly drafted and coordinated SNTs can be used for various expenditures above and beyond the minimal benefits provided by the government, including, but not limited to luxury items such as vehicle purchase and maintenance, vacations, entertainment expenses and other items as needed.

There are various forms of Trusts, a few of which are:

• Revocable Living Trust (“RLT”)
  
• Irrevocable Life Insurance Trust (“ILIT”)
  
• Special Needs Trust (“SNT”) for children with special needs
  
• Advanced Healthcare Directive (”AHD”)