A special needs trust or supplemental needs trust (SNT) is something you can utilize to set your child up for the future. It can be used to provide financial security without leaving them ineligible for government benefits. The funds in the trust belong to the trust, not the beneficiary, so they don’t factor into your child’s government benefits eligibility. An SNT is intended to supplement those benefits.
Basic terms to know:
- Trustee: the person who manages and distributes the assets according to the terms of the trust.
- Beneficiary: the person who receives the benefits of the trust.
- Grantor: the person who creates the trust and contributes assets to it.
It is best to get in touch with a lawyer that specializes in SNTs, as the trust must comply with both state and federal laws, but here are some basic things to know:
- You will need to choose what kind of trust.
- A first party trust is established with the beneficiary’s assets. These are commonly used when a person receives an inheritance, a life insurance payout, etc.
- A third party trust is set up by someone other than the beneficiary. This type of trust can be funded throughout the life of the grantor.
- You will need to choose a trustee. This can be a friend, family member, lawyer, other professional, or yourself. This person is responsible for administering the trust.
- A special needs trust can be included in a will and does not need to be a stand-alone document.
What are some things a trust can be used to fund?
- Medical expenses not covered by insurance
- Home modifications
- Education
- Entertainment
