To assist families with Special Needs individuals in the third-party administration of those Special Needs Trusts, to make sure they operate as designed and to reduce the burden of high financial fees on the administration of such trusts.
A Special Needs Trust is an irrevocable trust that is created when property (real estate, insurance, financial instruments, tangible items of value, etc.) is managed by a person for another person’s benefit. The person managing the property is called a “trustee.” The person whose benefit it is for is called the “beneficiary.” The trust can be designed and can last as long as it is needed. This usually means the trust will go on until the beneficiary’s death or until the funds are depleted.
Despite its generic use, the term “Special Needs Trust” (also known as a SNT) refers to the specific type of trust that can be created and is authorized by the Social Security Act at Section 1917(d)(4)(A) and in federal law in the United States Code at 42 U.S.C. Section 1396p(d)(4)(A).
Special Needs Trusts are made specifically for the benefit of disabled or neurologically diverse beneficiaries, such as those with Down’s Syndrome or Autistic individuals. These beneficiaries may lack the mental capacity to manage their own finances and/or are vulnerable to illicit individuals.
According to 42 U.S.C. Section 1382c(a)(3), someone will be found to have a disability if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. The trust is created with the specific needs, lifestyle and future of the beneficiary in mind. Oftentimes, these Special Needs Trusts are used to ensure that the beneficiaries don’t lose available government benefits they may be receiving or the eligibility for such benefits in the future. The trustees of Special Needs Trusts can be family members or, if an appropriate and trustworthy family member is unavailable, then a third party will be appointed by the court, if a successor trustee is not appointed in the trust document.