By: Katelyn A. Sweeney
A Special Needs Trust, also referred to as an SNT, is a tool used in estate planning to allow a beneficiary receiving government benefits to receive distributions from a Trust Agreement without jeopardizing such benefits. There are a few types of SNTs, including a Third Party SNT.
A Third Party SNT allows a grantor, someone creating an estate plan, to leave assets to a disabled loved one. In the past when a grantor left assets for the benefit of a disabled individual, they risked jeopardizing that individuals ability to receive public benefits, such as Supplemental Security Income (SSI) or Medicaid. However, the creation of a Third Party SNT can prevent such jeopardization of benefits by protecting both individuals that are already receiving public benefits and those that may receive such benefits in the future. This is accomplished because the Trust holds the assets, and distributions are only made when they can appropriately supplement government benefits.
A Third Party SNT contains similar components to those of any other trust. The grantor will name a Trustee, outline how and when the trust shall be distributed to the disabled individual, and name an alternative beneficiary to receive the remaining benefits of the Trust if the disabled individual predeceases the trust assets. The grantor can also express wishes to have the remaining trust assets used to properly fund the funeral and burial expenses of the disabled individual before distributing to the alternative beneficiary.
Sharon A. Burgess, Danelle E. Harrington, and Katelyn A. Sweeney practice in the areas of probate/estate planning, long term care planning and elder law, and business and real estate transactions at SMITH BOVILL, P.C. Their articles are intended to introduce various issues arising within this field of practice and are not intended to replace individual legal advice. If you have questions, please contact Sharon, Danelle, or Katelyn at one of the firm’s two convenient office locations in Frankenmuth and Saginaw.