Supplemental needs trusts can be exceptionally useful when planning your estate. These trusts, which provide funds to benefit a spouse who becomes disabled and is in need of long-term care benefits, can be essential in protecting your loved one’s assets while still ensuring they get the care they need. Read over some common questions and answers about supplemental needs trusts, and learn where you can go for more information about setting one up.
What Is a Supplemental Needs Trust?
Supplemental Needs Trusts, or SNTs, are created to create discretionary funds that a trustee can access, for the benefit of a spouse who currently is, or may become, disabled due to age or illness. They can also be established to care for a child or grandchild without the loss of government benefits. When creating an SNT for a spouse, it must be established in the Will.
Is a Supplemental Needs Trust the same as a Special Needs Trust?
Yes, the two terms are used interchangeably. Colloquially, trusts to benefit elderly people are called “supplemental,” while those that benefit children are called “special.” For all practical purposes, however, they are the same thing.
How is an SNT Accessed?
Beneficiaries of an SNT do not access funds directly. Rather, the trustee will distribute funds on a discretional and needs-based basis. They cannot give funds directly to the trustee, since this can endanger government-based benefits; rather, funds are used to pay for services.
Can an SNT Be Used for Food and Lodging?
No, funds from a supplemental needs trust cannot be used to pay for basics like mortgage, rent, or food. They are not intended to cover the things that government benefits do.
Who Should Be Chosen as Trustee?
The trustee should be someone the beneficiary trusts implicitly. It should be someone who is capable and responsible enough to carry out the wishes of the beneficiary. If there is no one in the family that can be trusted, professional trustees can serve in this capacity. It’s important that whoever you choose understands the impact that distributing assets can have on eligibility for other benefits like Social Security and government disability.
What Assets Can an SNT Hold?
A wide range of assets can be placed into an SNT. These include stocks, real estate, financial accounts, property or cash. When tangible property is placed in trust, the trustee can sell it to raise capital for the needs of the beneficiary, but real property also needs to have liquid assets to help pay for maintenance and taxes.
How Long Does a Trust Last?
An SNT lasts until there are no more funds in it, or until it’s no longer needed. Events that can end such a trust include the death of the beneficiary, the time that government benefits are no longer needed, or the beneficiary becomes ineligible for benefits from the government. If the beneficiary dies and there are still funds left, these will be distributed to a secondary (remainder) beneficiary, who is named in the trust.
How Do I Set up an SNT?
Setting up supplemental needs trusts can be complex, and there is very specific language that must be used. For that reason it’s always best to secure the services of an experienced estate planning attorney. For help with setting up trusts in Ohio, call the Stano Law Firm today.