Supplemental Needs Trusts
Supplemental needs trusts (SNT) are designed to provide funds for a disabled, blind, or aged person to maintain or enhance the person’s quality of life while also ensuring that certain government benefits are not taken away. A properly drafted supplemental needs trust protects trust funds from being considered “available” or “counted” for means-tested government benefit eligibility. “Means-tested” means a benefit that is only given to people who meet the financial qualifications. If an individual is receiving means-tested benefits or might receive them in the future, a supplemental needs trust may be appropriate to avoid disqualification from those government programs.
To receive means-tested government benefits, an individual’s assets and income will be examined to determine if they are eligible. If there are assets and income available to pay for an individual’s basic needs, such as food and shelter, then the amount of government benefits can be reduced or taken away. A supplemental needs trust is drafted with specific provisions to restrict the trust funds from being available for the beneficiary’s basic needs, so that the funds do not affect eligibility for means-tested government benefits. Common means-tested government benefits include Supplemental Security Income (“SSI”) and Medicaid.
Government programs providing benefits that are not means-tested are often referred to as entitlement benefits. These benefits do not contain the same strict financial eligibility limits as means-tested government benefits. Common entitlement benefits include Social Security Disability Insurance (“SSDI)” and Medicare.