The last thing parents want to do is to inadvertently jeopardize their children's public assistance benefits because of an inheritance we leave them. And we don't want to cut our special needs kids out of our estate plans altogether because we do want to continue providing for them after we're gone. That's where special needs trusts come in handy.
Special Needs Trusts (SNTs), also called Supplemental Needs Trusts, can be incorporated into your estate plan to leave assets and monies to your special needs kids without jeopardizing their government benefits. SNTs can be incorporated into your Will or Living Trust or established as a "stand alone" trust altogether.
The goal of a SNT is to maximize and supplement (not take the place of) government resources the disabled child is or may be entitled to. The SNT specifically provides that the trust funds are to be used in the trustee's sole discretion for goods and services over and above what government assistance provides for the disabled child. The SNT cannot be revoked or amended by the disabled child and, when set up properly, cannot be assigned to the disabled child's creditors, including the government.
Special Needs Trusts should also be incorporated into any person's estate plan under which a disabled child or adult might inherit, even remotely, including the grandparents, aunts, uncles and godparents of the disabled person. Without proper planning, a well-meaning family member might simply leave an inheritance to a disabled child. This could have the adverse effect of immediately jeopardizing the disabled child's public assistant benefits. Even though it may be possible to establish a SNT after the fact, the funds will have already legally been available to the disabled child.
Parents, godparents and others with the foresight to leave funds in a SNT will provide significantly better benefits to the disabled child which will not require any type of "payback" to the State for Medicaid benefits upon the child's death.