Who Does a Special Needs Trust Benefit?

October 12, 2023
Media Estate Lawyers at Eckell Sparks Help Families Establish SNTs for Their Loved Ones

Caring for a loved one who is physically or mentally disabled or has special needs can be rewarding and challenging.  Pennsylvania families must provide for their special needs family members while safeguarding their right to essential government benefits.  A special needs trust (SNT) is designed to address this challenge. 

A trust is a fiduciary agreement between a grantor, a trustee, and a beneficiary, which minimizes taxes and provides other benefits to the beneficiary.  A trust can also be used for a loved one with special needs. 

A SNT is a legally binding arrangement designed to provide financial support and security for loved ones with disabilities without harming their eligibility for government benefits such as Medicaid or Social Security.  By placing assets in a trust, a grantor can ensure their disabled loved ones can access additional funds to enhance their quality of life without compromising their government-aided benefits. 

What Are the Benefits of an SNT?

There are certain essential benefits to an SNT, including:

  • Keeps government benefits: One of the primary advantages of an SNT is that it protects an individual’s eligibility for government programs like SSI and Medicaid. Without a trust, an inheritance or financial windfall could disqualify a disabled loved one from receiving these vital benefits.
  • Quality of life: SNTs allow funds to be used for expenses not covered by government programs. This can include medical treatments, therapy, education, medical technology, transportation, or even leisure activities that improve the individual’s overall well-being.
  • Peace of mind: Families can know their loved one’s secure financial future. SNTs provide a structured and legal means of providing for individuals with disabilities in the long term.

Are There Different Types of SNTs?

In Pennsylvania, there are a few different types of SNTs:

  • First-party special needs trust: This type of SNT is funded with assets owned by the individual with special needs. It allows the person to retain eligibility for Medicaid while using the trust assets for supplemental purposes. However, upon the individual’s passing, any remaining funds in the trust are typically used to reimburse Medicaid for benefits provided during their lifetime.
  • Third-party special needs trust: The more common SNT, this trust is established by someone other than the individual with special needs. Typically, parents or family members create third-party SNTs to secure the financial future of their loved one with a disability. These trusts are irrevocable, meaning creditors or a lawsuit winner can access the funds and provide for various needs, such as medical expenses, housing, and recreation.
  • “Pooled” special needs trust: Managed by nonprofit organizations, a “pooled” SNT combines the resources of multiple beneficiaries into one.  It can be a first or third-party trust, and benefits include reducing administrative fees and accepting contributions from multiple beneficiaries. 

SNTs play a vital role in ensuring the financial security and well-being of individuals with disabilities. These trusts offer a solution to the delicate line between providing financial support and keeping access to essential government benefits. By establishing an SNT, families can provide their loved ones with the care, resources, and peace of mind they deserve, knowing their future is protected.

Media Estate Lawyers at Eckell Sparks Help Families Establish SNTs for Their Loved Ones

Navigating the complications of an SNT requires the guidance of a skilled lawyer.  Our Media estate lawyers at Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews & Auslander, P.C. are here to help.  Call 610-565-3701 or fill out our online form for an initial consultation.  Located in Media and West Chester, Pennsylvania, we serve clients in Delaware County, Chester County, and Montgomery County.