Special Needs Trusts
This excerpt is from an article about Special Needs Trusts by Danny Alvarez which appeared in the September 2009 edition of the Paraclete – a publication of the St. Petersburg Bar Association:
What is a SNT (Special Needs Trust)? An SNT is a government benefits preservation vehicle. It helps to keep a beneficiary's assets in trust while maintaining their government provided assistance.
Which type of trust should you use? Essentially there are three types: Disability trusts (42 U.S.C. §1396(d)(4(a)), Pooled Trusts (42 U.S.C. §1396(d)(4(c)) and Third Party SNTs.
* Beneficiary must be under 65 and disabled as defined by U.S.C. §1382c(3)(A).
*Can be established by court order, parent, grandparent and legal guardian.
*Must be established with beneficiary's assets including settlement proceeds.
* Must be administed for the sole benefit of the beneficiary.
* Must include a payback provision at death or termination of trust to reimburse the government. If there are any funds left after reimbursement, the grantor can determine the residual beneficiary.
* No age requirement.
* Must be disabled as defined by U.S.C. §1382c(3)(A).
* Can be established by court order, parent, grandparent, legal guardian and/or the beneficiary.
* Must be established with the beneficiary's assets.
* Must be administered for the sole benefit of the beneficiary.
* Includes a payback provision at the death of the beneficiary to reimburse the government. If there are any funds left after reimbursement, the non-profit will retain the funds and distribute them to other non-profits.
* Trust must be administered by a non-profit organization.
Third Party Trust:
* Similar to a traditional trust with special needs turst language included.
* No age restriction.
* Funded with third party assets.
*No payback provisions. The grantor is free to direct how the remaining assets with be distributed at the beneficiary's death.
Who Needs a Special Needs Trust? Mr. Alvarez lists examples including: someone with a physical disability; a young couple with an autistic child; a legal guardian of an elder ward; a young man disabled in an auto accident; or a family looking to care for a mentally ill loved one. The possibilities are many with a common element being a defined disability.
If you are interested in learning more about Special Needs Trusts, you can read Mr. Alvarez's full article in the Paraclete or email him at firstname.lastname@example.org or email@example.com.