Helpful Tips When Setting Up a Third-Party Supplemental Needs Trust

Securing the future of a loved one with special needs requires foresight, empathy, and precision.  A third-party supplemental needs trust (SNT) is one of the most effective estate planning tools to ensure your disabled child or family member can access resources to enhance their quality of life without jeopardizing their eligibility for essential government benefits like Medicaid and Supplemental Security Income (SSI).  For more insights, see our well-detailed article on special needs planning for a disabled child.

As an estate planning attorney who has guided a plethora of families through special needs planning, I have curated some helpful tips for setting up a third-party SNT for a child with special needs.

Consult an Experienced Attorney

The first and most essential step in setting up an SNT is consulting an estate planning attorney that specializes in special needs planning.  The attorney will help you understand third-party SNTs and how they differ from other special needs trusts, assist you in defining the purpose and scope of the trust, and help you navigate the legal requirements to ensure the trust complies with state and federal laws.

Choose the Right Trustee

Choosing the right trustee is key to the success of your SNT.  While family members might seem like the obvious choice, they may not understand the complexities involved in managing an SNT.  Consider pairing a professional trustee who possesses the needed expertise with a trusted family member who would serve as the co-trustee.

Funding the Trust

You can fund the trust while you are alive or after you pass away.  Assets like cash, investments, life insurance, and properties can be put into the trust.  Ensure these assets are correctly titled in the name of the trust.

Structuring Trust Distributions

Proper distribution planning is essential for maintaining eligibility for government benefits. The trust should explicitly prohibit distribution for expenses that could reduce SSI benefits and focus on enhancing quality of life.

Common Mistakes to Avoid

• Not Consulting a Qualified Attorney

Setting up an SNT without consulting a qualified attorney can lead to costly errors, risking benefit eligibility and trust effectiveness.  A qualified attorney helps navigate complex legal and tax regulations and ensures the trust is properly structured to protect your loved one’s interests.

• Overlooking Critical Eligibility Guidelines

Failing to grasp the eligibility rules for SSI and Medicaid can jeopardize an SNT beneficiary’s benefits. Consulting a special needs attorney ensures the trust is structured to maximize those benefits and avoid costly mistakes.

• Allocating Excessive Assets to the Trust

Overfunding an SNT can disqualify the beneficiary from government benefits.

• Neglecting Annual Reviews

Review and update the SNT annually to ensure it still meets the beneficiary’s needs. Consider any changes in tax laws, the beneficiary’s situation, or the trustee’s capacity to serve.

Proper special needs planning can provide peace of mind and security for you and your child. Feel free to contact experienced attorneys at the Law Offices of Roman Aminov, P.C let’s help you establish a plan for your family.