What is a Supplemental Needs Trust

11/19/2013

People who have disabilities often rely on Medicaid and Supplemental Security Income (SSI). Generally, to qualify for these programs you must stay within very modest upper asset and/or income limits.  If someone has assets or income above these limits, they very well may not qualify for Medicaid or SSI.

If you name someone who is receiving these benefits in your estate planning documents, their benefit eligibility may be jeopardized.

Is there any way that you can leave property to someone with a disability without doing more harm than good (meaning disqualification from Medicaid or SSI)? The answer is yes. You could make the person the beneficiary of a special type of trust that is generally referred to as a supplemental needs trust.

The name “supplemental needs trust” provides a hint with regard to how it works. You can’t put money directly into the hands of the beneficiary without violating program rules with regard to asset ownership and disqualifying the beneficiary from governmental aid.

However, the trustee who is administering a supplemental needs trust could spend money that has been conveyed into the trust to enhance the quality of life of the beneficiary. These expenditures would be used to address supplemental needs.  To understand what is meant by “supplemental needs,” in a general sense they would be expenses that would not be covered by the government benefits.