When it comes to caring for a loved one with special needs, you may face unique challenges. These can range from looking after their everyday needs to planning long-term care. It’s natural to worry about their future when you’re no longer there to support them. Fortunately, a Special Needs Trust (SNT) can provide a solution. But if your loved one relies on aid like Supplemental Security Income (SSI) or Medicaid, it’s essential to understand the nuances of this type of trust.
SNTs are irrevocable and, therefore, protect aid eligibility
An SNT is a specific type of irrevocable trust designed for a person with special needs. New York recognizes two types of SNTs: first-party and third-party. A first-party SNT includes your loved one’s own assets, like an inheritance, whereas a third-party SNT holds assets from others, such as parents or friends.
Due to the trust’s legal structure, its assets are the trust’s property, not your loved one’s. Thus, individuals who own assets beyond a specific limit might not qualify for certain government aid. However, those with assets in an SNT, either a first- or third-party, can potentially be eligible, as they don’t personally own these assets.
SSI or Medicaid: A brief example
SSI or Medicaid benefits have income and property limits. If your loved one were to receive a large inheritance directly, it could jeopardize their eligibility for these benefits. By contrast, if you leave that inheritance in an SNT, the assets aren’t counted as their property, allowing them to continue receiving their benefits while also benefiting from the trust.
Set up a legal trust
Thinking about leaving a loved one with special needs can be hard, and the thought of leaving them forever is even harder. While you can’t fully control what happens to them when you’re gone, an SNT can help make sure they get the care they need.
However, it’s crucial to establish an SNT correctly. A poorly set-up SNT can disrupt government benefits. If you’re considering an SNT, consider consulting a legal professional. They can guide you through the process of creating a legally valid trust that aligns with your loved one’s best interests.