If you have a loved one who is living with a disability, maintaining their eligibility for Supplemental Security Income (SSI), Medicaid, or other government benefits is immensely important. To be eligible for SSI in 2019, for example, the applicant must have less than $2,000 ($3,000 for a married couple) in countable resources. Therefore, if you are not careful, any gift you make to your loved one could negatively affect their benefits eligibility.
Yet living solely on government assistance can be challenging for your loved one. Government benefits often fall short and only cover the basics. For example, while benefits may provide limited compensation for medical care, housing, and food, there are many expenses that they do not cover, such as transportation, non-food grocery items, education, etc. How can you help fill those gaps and provide for your loved one without jeopardizing their government benefits eligibility? That’s where a special needs trust may help.
What is a Supplemental Needs Trust?
A Supplemental Needs Trust is a trust created for the benefit of a person with a disability (a Beneficiary) who is or will be receiving publicly funded benefits. A Supplemental Needs Trust allows others to provide funds and assets to a Beneficiary while protecting that person’s benefits eligibility and guarding those assets from compensation claims by the government. Supplemental Needs Trust assets can be used for reasonable living expenses and other basic needs when government benefits are insufficient. A corollary to a Supplemental Needs Trust is a Special Needs Trust. The primary difference between the two stems from whether the trust is funded with the Beneficiary’s assets (Special Needs Trust) or someone else’s (Supplemental Needs Trust).
How Trust Funds Can Be Used
Supplemental and Special Needs Trust funds must be used for the purpose of supplementing, rather than supplanting, any assistance or benefits to which the Beneficiary may be (or become) entitled to receive as a result of his or her disability. Funds cannot be used for any expenses that government benefits may cover.
Is a Supplemental Needs Trust or Special Needs Trust Right for You?
This article covers only the basics. A licensed attorney will be able to assist you in determining whether one of these trusts is suitable for your situation and ensure that the trust is properly drafted to protect your loved one’s benefits eligibility. If you live in Minnesota and would like to schedule a consultation, please contact your attorney at Melchert Hubert Sjodin.