When you’ve worked hard to build wealth, the last thing you want is to see it jeopardized—especially when it comes to securing the future of a loved one with special needs. Without proper planning, your financial support could unintentionally disqualify them from vital government benefits like Medicaid or SSI. That’s where Vick Law comes in. Through strategic estate planning, including Special Needs Trusts (SNTs), we help families protect their assets and their loved ones’ eligibility for essential programs. Our tailored approach ensures your legacy provides both security and peace of mind for generations to come.
A Special Needs Trust, or SNT, protects a person with a chronic disability and supplements means-tested government benefits, like Medicaid and SSI (Supplementary Security Income). Trust assets improve the quality of their lives by paying for things not covered by government programs.
There are different types of Special Needs Trusts.
The “First-Party” SNT, also known as a “self-settled” trust, is funded with assets or income belonging to the individual who is also the beneficiary of the trust. The trust must be irrevocable and must reimburse Medicaid upon its termination or the death of the beneficiary. These trusts are typically funded with assets from a personal injury settlement or an inheritance.
Another type of SNT is the “Third-Party SNT,” also known as a “Supplemental Needs Trust.” The trust may not own any assets originally owned by the disabled individual. The assets for the Third Party SNT usually come from life insurance proceeds, gifts, or inheritances from parents or grandparents. There’s no requirement for the trust to reimburse Medicaid, and the person creating the trust—the Third Party—determines how to distribute the remaining assets on the beneficiary's death.
A “Pooled” Self-Settled SNT is an SNT managed by a nonprofit organization, typically to benefit people over 65. Donors deposit funds into a pooled trust, which goes into separate accounts for each beneficiary. When the beneficiary passes, the nonprofit organization keeps the remaining funds.
Are There Limits on How SNT Funds May Be Used?
SNT funds must be used solely for the benefit of the disabled individual. However, this can become complicated. Funds may be used for special therapies or training, for example. However, payments should be made directly from the trust to the provider. Giving money to the beneficiary to pay the provider could put SSI/Medicaid benefits at risk, since it may be considered income.
Funds from the SNT should not be used for food, shelter, or clothing, since this is what SSI benefits are intended to cover. The SNT funds may be used for recreational activities, entertainment, online services, computers and other electronic devices, medical equipment or services not covered by Medicaid, transportation costs, personal items and household items.
What is the Goal for the SNT?
The purpose of an SNT is to help individuals with special needs have a better quality of life by paying for things not covered by SSI or Medicaid. Adhering to the rules is very important to protect their eligibility for benefits.
Special Needs Trusts and Estate Planning
Creating an SNT should not take place in a vacuum. If the family is creating the trust so the individual will have resources after the passing of the last surviving parent, the SNT must be structured to comply with Medicaid and SSI regulations and align with the family’s estate plan.
Protecting what you’ve built—and the people you love—requires more than good intentions; it takes thoughtful planning. At Vick Law, we create customized estate plans that safeguard your assets, support your family’s unique needs, and maintain eligibility for critical benefits. Whether you’re considering a Special Needs Trust or reviewing your overall estate strategy, we’re here to guide you every step of the way. Contact us today to secure your family’s future with confidence.
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