Special Needs and Supplementary Needs Trusts

SNT Trusts are established to supplement, but not to replace, the benefit a disabled beneficiary may receive for SSI, Medicaid, and other Government Benefit Programs.

ESTABLISHING A TRUST

• Execute a properly drafted Trust
• Obtain the Employee Identification Number (EIN)
• Name of Trust
• Name of Grantor
• Grantor’s Social Security Number
• Name of Trustee
• Trustee’s Address
• Trustee’s Social Security Number
• Trustee’s Date of Birth

TERMINATION OF TRUST

• Death of Beneficiary or Operation of Law

STEPS TO CONCLUDE TRUST

• Pay final expenses of the Trust
• Case Management Services
• Investment Advice
• Legal Advice
• Tax Preparation
• Administrative Costs
• Income Taxes
• Estate Taxes
• Personal Debts
• Funeral Expenses
• Medicaid Reimbursement
• Make final accounting to remaining beneficiaries
• Distribute any remaining assets

GENERAL RULE

An SSI recipient may receive up to $20.00 per month of unearned and/or in-kind income without penalty.  Any unearned and/or in-kind income in excess of $20.00 will be deducted from the SSI benefit on a dollar-for-dollar basis.  To avoid a reduction in benefits, a Trustee must take care to ensure that expenditures made on behalf of the beneficiary are not considered unearned or in-kind income.

NOTE:  Home is a non-countable asset, regardless of its value, as long as the recipient is living in it.  If the recipient owns the home, the following are also non-countable:

• Landscaping
• New roof
• Snow removal
• An addition
• Residential support staff
• Make a bathroom accessible

Social Security converts any housing bills to monthly amounts, even if the payments are required every six (6) months or annually.  For example:  Property Taxes, Homeowner’s Insurance, and Association Fees.

**General Rule: Cash to beneficiary would be unearned income.

RECREATIONAL EXPENSES

• Paid companion
• Gifts (birthdays, holidays, and special occasions)
• Club Memberships
• Movie and Concert Tickets
• Restaurant Meals ($20.00 cash per month) applies to the $20.00 income exception or “Therapeutic milieu experiences.”
• Vacation and Travel – recipient can receive both food and shelter during a temporary absence from home, such as a vacation. A temporary absence is one of at least 24-hours duration.

MEDICAL (MEDICAID) EXPENSES

• May pay for medical expenses not covered by Medicaid.
• If beneficiary does not have Medicaid, the trust funds can be used to purchase medical insurance and pay for co-payments, deductibles, and other out-of-pocket medical costs.
• Trustee should pay medical provider directly.

TRANSPORTATION

• Beneficiaries can own their own vehicles.
• Trust can pay for gas, maintenance, repairs, registration, and insurance.
• Trustee should obtain gas card. Cash should NOT be given to beneficiary for payment of any of the above-mentioned items.
• If beneficiary uses public transportation, Trustee should purchase tickets or tokens for the beneficiary.

GLOSSARY

1. SPECIAL NEEDS TRUST: A Special Needs Trust or Self-Settled Trust is funded with the disabled beneficiary’s own assets.  Must be court approved and contain requisite Medicaid “payback” language.
2. SUPPLEMENTARY NEEDS TRUST: A Supplementary Needs Trust or Third-Party Trust is funded with assets that belonged to someone other than the disabled beneficiary.
3. SUPPLEMENTAL SECURITY INCOME (SSI): SSI is a federal benefit program, paying monthly cash benefits to aged, blind, or disabled individuals who have limited income and financial resources.
4. EARNED INCOME: Earned income is earning from wages or self-employment.
5. UNEARNED INCOME: Unearned income is income that is not received from work.  Unearned income includes periodic payments, such as Social Security benefits, annuities, alimony, child support, dividends, bank account interest, royalties, rents, and one-time benefits such as prizes, awards, gifts, and inheritance.
6. IN-KIND INCOME: In-kind income is defined by Social Security rules as “not cash, but food or shelter, or something the recipient can use to get one of those three (3) items.”
7. COUNTABLE RESOURCE: Countable resource is generally defined as cash or other liquid assets or real property that the applicant owns and could convert to cash.  For example:
   • Cash, which is not the current month’s income;
   • Income-producing property, including real estate; and,
   • Life insurance with a cash value in excess of $1,500.00.
8. NON-COUNTABLE RESOURCES:
   • Personal residence (home), including a condominium;
   • Automobiles of any value;
   • Assets and a Plan for Achieving Self-Support (PASS);
   • Burial insurance; and,
   • Life insurance with a cash value of less than $1,500.00.