As you’re doing your estate planning research, you run across the idea of a special needs trust, or an SNT. Since you have an heir with special needs, this idea instantly stands out to you, but you want to make sure you understand exactly what advantages it may give you. Why would you use this type of trust?
Essentially, when determining if your heir is eligible for some government assistance programs, the government does not consider your wealth as a parent. They do, however, consider your heir’s own assets once they have reached adulthood. If they have too much, they may not qualify for some of these very important programs.
If you leave your money directly to your heir, either in a will or by not writing out an estate plan at all, that increases their personal wealth. The government then looks at those assets and may determine that they are no longer eligible for some types of assistance that they have already been using. Examples include:
- Food stamps
- Housing subsidies
- Supplemental Security Income (SSI)
If you put the money into a trust, though, they do not own it. Those assets belong to the trust. They only get the assets under the provisions of the trust. This way, you protect their eligibility for government assistance and you still put your assets in a place where they can help your heir.
If you decide to do this, it’s important to work carefully and make sure you know exactly what steps to take. You need to set up an estate plan that not only addresses your needs but also the needs of each and every heir.