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Third Party Supplemental Needs Trusts
Third Party Supplemental Needs Trusts are created with the assets of someone other than the disabled person. Similar to a Self-Settled Special Needs Trust, assets held by a properly drafted Third Party Supplemental Needs trust are not deemed available to the beneficiary and, therefore, won’t disqualify the beneficiary from receiving government benefits and provides a safety net to the disabled individual for his or her lifetime.
In the past, it was not unusual to plan for a disabled child or adult by disinheriting that person. Such a drastic strategy is no longer considered appropriate. Third Party Supplemental Needs Trusts are now strongly recommended to those who wish to provide financial support to a disabled loved one. Such a trust allows you to ensure that your disabled loved one will benefit from the funds you leave them at your death or provide to them during your lifetime without disqualifying them from receipt of public benefits or from receiving such benefits at a future date.
A designated Trustee manages the assets in the Third Party Supplemental Needs Trust and makes distributions to or for the benefit of the disabled beneficiary. It is critical that the Trustee be intimately familiar with the very specific rules and regulations involved with government benefits to ensure that the assets in the trust are not deemed an available resource to the beneficiary, thus leading to disqualification for benefits. These rules and regulations are consistently changing and a Trustee must be vigilant regarding changes to these rules or risk unintentionally disqualifying the beneficiary's eligibility for benefits.
Unlike a Self-Settled Special Needs Trust, the creator of the Third Party Supplemental Needs Trust can determine to whom assets remaining in the trust at the death of the disabled beneficiary will be distributed. It is NOT necessary to provide for the payback to the government for services provided to the disabled beneficiary.
If you wish to provide for a disabled individual at your death or during your lifetime, contact one of the Supplemental Needs attorneys at Huck Bouma. If you are the Trustee of a Third Party Supplemental Needs Trust and would like guidance on proper trust administration, schedule a consultation or trust review today.
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