A Supplemental Needs Trust, Does your Family Need One?

On occasion I meet with parents heroically helping manage the life of an adult child struggling with mental illness. It is heart breaking to understand the physical and financial sacrifice parents give to make the life of a mentally disabled adult child better. The unconditional love for these adult children is truly wonderous.

These parents are often looking to extend their care and concern beyond a time when the parents have passed from this world. To help achieve this goal, I often suggest their Will include a Supplemental Needs Trust (SNT).

How does a SNT work?

At the time of a parent’s death, her Will provides a vehicle in which a parent’s assets are placed in Trust for the benefit of the adult disabled child.

Why is a SNT important and why not leave an outright bequest or gift directly to the disabled adult child?

Assets placed in a properly drafted (SNT) will not disqualify the disabled child for the government health insurance he/she receives because he/she is on Supplemental Security Income (SSI) or Medicaid. The asset limits for SSI and Medical Assistance are quite low. For example in the Medicaid Insurance Program, in Pennsylvania, the countable asset limit is $8,000.00; therefore, having the ability to place a large inheritance in Trust for a disabled adult child can be very valuable to the child. It enables the child to make limited use of the inheritance without jeopardizing her government health benefits.

If you are a parent with a disabled adult child receiving government health benefits, consider setting up a Third Party Supplemental needs Trust in your Will.

Robert H. Lugg, a Lock Haven Attorney and “A Resource for the Long-term Care Community” may be contacted at www.lugglaw.com or 570-748-2481.