Continuing with last month’s discussion of testamentary trusts, another common testamentary trust is a Special Needs Trust, also sometimes called a Supplemental Needs Trust (SNT). A SNT is a trust for a disabled individual. If the terms are compliant with Social Security regulations, the funds in the trust do not affect the beneficiary’s eligibility for public benefits like SSI and Medicaid. A Testamentary SNT ensures that your beneficiaries will not lose any benefit eligibility due to their inheritance.
The term “supplemental needs” refers to the beneficiary’s needs that are not covered by Medicaid or SSI. The trust assets are simply meant to supplement the beneficiary’s public benefits rather than replace them. We typically include a testamentary SNT in each Will we draft to protect eligibility for the beneficiaries in case they become disabled. An outright inheritance could cause a disabled beneficiary to exceed asset limits and lose important benefits.