When one creates an estate plan, he or she will generally inquire as to the provisions that will protect the rights of minor children. What is often overlooked is planning for adult beneficiaries who may be receiving governmental benefits such as Medicaid or Supplemental Security Income. Certain govern- mental programs have income and resource limits and the receipt of an inheritance could affect continuing eligibility for benefits. Planning strategies can be incorporated to en- sure that the adult beneficiary with special needs can receive the full benefit of an inheritance without suffering a reduction in governmen- tal benefits. This is done through the establishment of a Supplemen- tal Needs Trust (SNT).
An SNT can be created through a will or under the terms of a revoca- ble or irrevocable trust. The SNT can provide that, upon the death of the creator(s) of the trust, the inheri- tance will be held IN TRUST and can be used to supplement and not re- place or diminish any benefits or as- sistance the beneficiary may receive. The assets are intended to enhance the beneficiary’s quality of life and supplement governmental benefits. Upon the beneficiary’s death any re- maining assets can pass to the cre- ator’s other beneficiaries or otherwise as the creator directs.
An SNT can also be created and funded during the lifetime of the cre- ator. The assets of the creator of the trust can then be used for the beneficiary’s supplemental care and benefit. This can be done through the mechanism of a Third Party Supplemental Needs Trust (Third Party SNT). Since the assets are held IN TRUST, they are not considered assets of the beneficiary and will not affect their ability to receive govern- mental benefits. Upon the beneficiary’s death, the assets can be distributed in accordance with the creator’s wishes.
If you would like to discuss the establishment of a Supplemental Needs Trust for an adult beneficiary, please give Berwitz & DiTata LLP a call so we can assist you.