Special Needs Trust

Typically, the Special Needs Trust (SNT) is set up as a fund that is privately and professionally managed and administered by a corporate trustee for the sole benefit of a person with disabilities or other impairments (the beneficiary). There are two basic types of SNTs: a General Support SNT and a Supplemental Care SNT. The vast majority of SNTs are Supplemental Care SNTs, which are designed to serve as a secondary source of benefits for the beneficiary after all available government benefits have been exhausted. The assets of a properly drafted Supplemental Care SNT are not considered “available resources” for purposes of qualifying the beneficiary for need-based benefits. By contrast, any property in a General Support SNT—which is designed to serve as the primary or sole source of benefits for the beneficiary—would be considered an available resource of the beneficiary, which can preclude eligibility for need-based benefits.

To determine which type of SNT is most appropriate for a disabled beneficiary, the primary consideration is whether the assets and resources belonging to, or otherwise available to, the beneficiary are likely to cover fully the cost of supporting and caring for the beneficiary during his or her lifetime. If such assets and resources are likely to be sufficient, then a General Support SNT may be appropriate. But if the beneficiary’s assets and resources are inadequate to fund fully all of the special needs of the beneficiary (as is more often the case), and need-based government programs could constitute a critical part of funding the beneficiary’s needs, then a Supplemental Care SNT may be in order. Most families who undertake SNT planning desire to maximize all available resources, including government programs. For that reason, the Supplemental Care SNT is by far the more frequent choice.