Page 61 - Senior Link Magazine Fall 2020- Online Magazine

HONORING SENIORS
SUPPLEMENTAL
NEEDS
TRUSTS
upplemental or special
needs trusts (SNTs) offer an
Seffective means for holding
and managing money or other
property for disabled children and
adults who have a disability and
who receive or may receive means-
tested public assistance, such as
Supplemental Security Income (SSI)
or Medicaid. Attorneys design
these trusts to supplement, not
replace, the assistance available to
the disabled.
To assist with understanding the
characteristics and uses of SNTs,
a little background is in order.
A trust generally works like a
partnership between a creator who
is called the trustor, grantor, or
settlor, and a trustee, essentially a
manager, who can be an individual,
bank, corporation, or other entity.
The trustor and the trustee agree
that the trustee will hold, manage,
and distribute the property owned
by the trust for the benefit of one
or more beneficiaries according to
the trust agreement signed by the
trustor and trustee.
A trust may own bank and
investment accounts, real estate,
vehicles, or almost any other
kind of property that a person or
by Lee Franks
partnership can own, and the trust trustor to keep the property until
agreement spells out when and how death when he or she hopefully will
the trustee may distribute property not need it.
to the beneficiary or beneficiaries.
Self-settled SNTs (sometimes
SNTs come in two very distinct called d4A trusts from the federal
forms: third party SNTs and statute authorizing them) differ
self-settled SNTs. Anyone can dramatically from third party SNTs.
create a third party SNT while Only the beneficiary (if he or she
he or she still lives, an inter vivos is able), a parent, a grandparent,
trust, or through his or her will, or a court may create one, and the
a testamentary trust. Either property to fund the trust comes
way, the key provision in a third from the beneficiary AND only if
party SNT is that the trustee has the beneficiary has not reached 65
absolute discretion not to make years of age. In addition, a self-
any distribution at all to or for settled SNT must have only one
the beneficiary. Typically, the beneficiary, be irrevocable, and
trustor funds or puts money into most importantly, have a provision
the trust, but usually the trust reimbursing any state that provided
agreement allows anyone who assistance to the beneficiary (the
wants to provide something for ‘claw back provision’). Most often,
the beneficiary to give money or the need for a self-settled SNT
other property to the trust. An arises when a disabled person
inter vivos SNT has the advantage receives money from an estate, life
of existing as soon as it is signed, insurance, a settlement in a lawsuit,
allowing the trustor or anyone else or other source. Often the parents
to immediately fund the trust or of a disabled person leave money
to name the trust in their wills or outright to the person when they
as the owner of real estate or as die, or a person with property
the beneficiary of a life insurance applies for disability assistance
policy, certificate of deposit, because he or she suddenly became
or other financial account or disabled, had an existing disability
instrument. On the other hand, that worsened, or simply did not
a testamentary trust allows the know such an option was available.
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