A third-party special needs trust (SNT) allows you to provide for a loved one with disabilities while preserving their eligibility for government benefits like Supplemental Security Income (SSI) and Medicaid. SNTs can cover various goods, services, and enriching experiences beyond basic support, offering your loved one an improved quality of life.
Understanding Third-Party Special Needs Trusts vs. First-Party SNTs
There are two types of SNTs: first-party and third-party. A first-party SNT holds the beneficiary's own funds, often from a settlement or inheritance, while a third-party SNT is funded by someone else, like a parent or relative. Importantly, a third-party SNT allows leftover funds to pass to other family members or charities upon the beneficiary's death, avoiding reimbursement to the state.
What Can an SNT Pay For?
SNTs are meant to supplement needs-based benefits—not replace them. Acceptable expenses often include:
- Clothing, technology, and electronics
- Education, hobbies, and recreational activities
- Specialized therapy and adaptive equipment
- Personal care and travel
However, SNTs typically cannot pay for essentials like rent, mortgage, or utilities without affecting government benefits.
Making the Most of SNT Funds
SNTs allow trustees to enrich a beneficiary's life in countless ways while keeping benefits intact. Here are a few ideas for using SNT funds creatively:
- Vacations and travel experiences
- Hobbies like music, art, or photography
- Memberships, adaptive sports, and exercise programs
- Technology such as computers, tablets, or phones
- Education programs, skill-building classes, and cultural events
Protect Government Benefits with Careful Management
Improper SNT administration can jeopardize benefits. Unauthorized distributions, like direct cash payments, can reduce or even terminate SSI or Medicaid support. Our expert estate planning attorneys can guide you in establishing or managing an SNT, ensuring compliance while prioritizing your loved one's quality of life.
Schedule a Consultation Today
We're here to help you create and manage a special needs trust that truly enriches your loved one's life without risking essential benefits. Contact us to learn more about third-party SNTs and how we can support you as a trustee, co-trustee, or advisor.
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