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What does a supplemental needs trust do?

In estate planning, it is typical for individuals to consider multiple tools to ensure they are preparing the appropriate documents for their needs. If one of the grantor’s beneficiaries has a disability, one of the estate planning tools they consider is a supplemental needs trust (SNT).

Understanding the trust

The supplemental needs trust is an estate planning tool that allows a person with a disability to receive trust funds to improve their quality of life without affecting their eligibility to receive benefits from government programs like Medicaid and Supplemental Security Income. Basically, the trust aims to supplement funds that government programs do not cover to enhance the life of a person with a disability.

It is also possible for a testator to reference an SNT in their will and have it established only if one of the beneficiaries suffers from a severe disability later on. This way, the inheritance of the beneficiary with a disability will not be distributed outright and will be held in an SNT instead.

What does improving the quality of life mean?

While government benefits cover the basic necessities of the beneficiaries such as sustenance and shelter, funds from the trust aim to cover equipment and activities that would benefit the individual’s well-being.

The trustee can use the funds from the SNT for the beneficiary’s education, leisure and entertainment, therapy, and anything that would improve the beneficiary’s quality of life and give them an emotional uplift.

Should I create an SNT?

Whether you should draft an SNT depends on your priorities and concerns. As with other estate planning documents, understanding how an SNT works will help you reach your goal and give you an idea of whether it is a good addition to your estate planning tools.