Special Needs Trust or Supplemental Needs Trust: What's the Difference?

When planning for the future of a loved one with disabilities, there are two options you could prepare without jeopardizing their eligibility for government benefits. The two common options are Special Needs Trusts (SNT) and Supplemental Needs Trusts (SuNT). Though they may sound similar, they serve distinct purposes.

What is a Special Needs Trust (SNT)?

A Special Needs Trust is designed to provide financial support for individuals with disabilities without affecting their eligibility for means-tested government benefits like Medicaid and Supplemental Security Income (SSI). The funds in an SNT can be used for expenses not covered by these benefits, such as education, entertainment, or medical expenses beyond standard care.

Key Features of SNT:

• Protection of Benefits: The primary advantage of an SNT is that it allows the beneficiary to receive financial assistance without disqualifying them from government benefits.

• Third-Party and First-Party Trusts: A third-party SNT is funded by someone other than the beneficiary, typically a parent or grandparent. A first-party SNT, also known as a self-settled SNT, is funded with the beneficiary's own assets, such as an inheritance or settlement.

What is a Supplemental Needs Trust (SuNT)?

A Supplemental Needs Trust specifically emphasizes the idea of "supplementing" rather than "supplanting" government benefits. It improves the quality of life for the beneficiary by providing for needs that government assistance doesn’t cover. This can include personal care attendants, out-of-pocket medical and dental costs, education, rehabilitation, and even vacations.

Key Features of SuNT:

• Complementing Benefits: Like an SNT, the SuNT is structured to not interfere with the beneficiary’s eligibility for government benefits.

• Broad Usage: The funds in a SuNT can be used for a wide variety of purposes that improve the beneficiary’s life, emphasizing the importance of maintaining their comfort and dignity.

Differences

"Special Needs Trust" and "Supplemental Needs Trust" are often used to mean the same thing. A Supplemental Needs Trust adds to, rather than replaces, government benefits. Legally, there's almost no difference between them. Both types of trusts help protect a person’s eligibility for government benefits while also providing extra support. The main difference is in how they are named and described, not in how they work.

For more information, contact our office at Askew & Associates, P.A. by calling 954-546-2699.

Disclaimer: this blog post is not intended to be legal advice. We highly recommend speaking to an attorney if you have any legal concerns.