+

Text size

Supplemental Needs Trusts

A Supplemental Needs Trust is a Trust that is established for the benefit of a person under a disability.  It can be set up by the person under the disability (a self-settled Trust) or it can be set up by a third party for the person under the disability (a third party Trust).  The purpose of all Supplemental Needs Trusts is to provide assets and income for the disabled person without causing that person to lose any government benefits such as Medicaid and Supplemental Security Income (SSI).  The assets and income are to be used to supplement the person’s needs and not be expenses that would otherwise be paid for by such programs.

Third Party Trusts

These Trusts can be established in the Last Will and Testament or in the Living Trust of the third party and are usually funded with the assets of the third party.  Upon the death of the person under a disability (the beneficiary of the Trust), the balance of the principal and undistributed income of the Trust, would go to the ultimate beneficiaries of the Trust, those persons chosen by the third party.

Self-Settled Trusts

These Trusts are established for the benefit of a person under a disability who is under sixty-five (65) years of age.  Such Trusts may be established with the funds of the disabled person but can be established by only certain parties.  A self-settled Supplemental Needs Trust can be established by a parent, a grandparents, a Court appointed Guardian or by a Court.  Upon the death of the person under the disability (the beneficiary of the Trust), the principal and undistributed income must first be used to pay back the Department of Social Services for any Medicaid benefits that were provided to the beneficiary of the Trust.  After Medicaid’s lien has been satisfied, the balance of the Trust fund goes to the estate of the beneficiary to be disposed of pursuant to the terms of his Will. To receive a free copy of A Simple Guide to Understanding the Complexities of Elder Law – a helpful booklet we distribute to our clients which contains definitions and explanations of some important terms – please contact us.