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Special Needs Trust
Referred to as a Discretionary Supplemental Care Trust
A Special Needs Trust (SNT), sometimes referred to as a Discretionary Supplemental Care Trust, is designed for the grantor/parent with a disabled child who is currently receiving supplemental security income benefits. This kind of plan creates a discretionary trust fund, allocated with a pre-determined amount within the grantor's own revocable (or irrevocable) trust, after his decease.
The grantor/parent often has a strong emotional need to do whatever he can to show love and affection toward such child, even after the grave. The parent wants to provide a source that would give extra meaning to the child’s life – which additional funds can help accomplish. The sole objective of this trust, then, is to have a vehicle that would "supplement" the disabled child's vested, public entitlement funds without disqualifying the lawful right to receive those funds. That goal can generally be accomplished by this type of discretionary trust.
The special language incorporated into the Special Needs Trust takes into consideration the federal law codifying such type of trusts as recorded in USC Title 42, 1396p(d)(4)(A). The Omnibus Budget Reconciliation Act of 1993 (OBRA 93) defined and thus established a precedent for the authority of this federal law. Notwithstanding, a few states attempt to disallow or least ignore, at least for public policy purposes, the validity and purpose of this type of trust. The state of Colorado, for example, enacted legislation that restricted the funding of such trusts to “the proceeds from any settlement or judgment based on an action or claim for personal injury… on behalf of the trust beneficiary…”. Legislation (or court decisions) of this kind apparently ignore such cases as Matter of Moretti, 606 N.Y.S. 2d 543 (Sup. Kings Co. 1993), pp. 547-548. This case stated "To the extent that… provisions of any… State statutes or regulations may be construed as being inconsistent with, more restrictive than, or in contravention of the spirit of OBRA ‘93”, they are not binding on this court (because) any such inconsistency would be violative of the supremacy clause of the United States Constitution."
Special needs planning with trusts is allowable by (federal and most state) law and should be a viable approach to benefiting a loved one receiving subsistence entitlements; however, there are no ironclad guarantees. This approach can only be considered as a "best effort" action for the loving parent to implement on behalf of a disabled child. Regardless of the outcome, this type of planning is a distinct and positive effort by any parent in this situation to show genuine love for his disabled child.
Charitable Remainder Trust - CRT $1900
A Charitable Remainder Trust may be used in an estate plan for asset protection purposes and to mitigate or reduce taxes.
Generation Skipping Dynasty Trust $900
Although the Generation Skipping Tax (GST) is a transfer tax, it should not be confused with the terms normally associated with estate tax.
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