Many families in New York have disabled family members. Taking care of a disabled family member is a lifelong endeavor for most. Providing for this family member extends beyond the life of the caregiver in many cases. The solution to providing for the long-term care of a disabled family member is a Supplemental Needs Trust.
What is a Supplemental Needs Trust (SNT)?
An SNT provides an opportunity for a disabled person or third parties, such as a family member or caregiver, to provide funds to the disabled person without adversely impacting Medicaid spending or disqualifying the person’s eligibility for other benefits.
Types of Supplemental Needs Trusts
There are three basic types of SNT. Each of them must be established as an irrevocable trust.
1. Individual: An individual, or self-funded trust, is funded using the income or assets of the beneficiary. This type of SNT cannot be funded by any third-party assets.
2. Pooled: Non-profit organizations manage an individual’s SNT on behalf of a beneficiary for a fee.
3. Third-party: A third-party SNT is funded by someone other than the beneficiary and uses the funds of the donor. A third-party SNT cannot use the funds of the beneficiary.
Some trust beneficiaries will have more than one type of SNT. For example, a disabled person may receive a personal injury settlement or an inheritance. The receipt of these monies may reduce or eliminate eligibility for important public benefits. Transferring the money into an SNT protects much of the adverse impact on benefits.
Government benefits Supplemental Trust Funds seek to protect:
The primary government benefits an SNT is established to protect are Medicaid and Supplemental Security Income.
Additional benefits a disabled person may be receiving include:
- Housing, including Section 8
- Home Energy Assistance Program (HEAP)
- Supplemental Nutrition Assistance Program (SNAP)
- Social Security Disability Insurance (SSDI)
- Veterans Pension
Proper management of trust funds can reduce or eliminate disqualification for some benefits. Some of the benefits have unique rules regarding how money is spent. There is also a concern about transfer fees. A trustee must keep a watchful eye on how money is used from an SNT to protect the benefits of the beneficiary.
Opportunity for families to care for a disabled family member
A Supplemental Needs Trust (SNT) is an excellent instrument for parents or others to provide additional resources for the needs of a disabled family member. This type of care lasts for the duration of the beneficiary’s life or as long as the beneficiary continues to be disabled.