Are Special Needs Trusts and Supplemental Trusts the Same?

When considering special needs planning, two terms are usually used, which are special needs trusts and supplemental needs trusts. As a result, there can be some confusion as to what they both mean and if they are different or the same. Both of these terms essentially mean the same thing and are intended to help individuals who have disabilities have resources for their personal needs while not jeopardizing their ability to secure necessary governmental benefit programs like Medicaid or Supplemental Security Income (SSI), for instance.

If you have a loved one with a disability in your life and is receiving government disability benefits, you may be wondering what you can do to support them and set them up for the future so that they receive  care over and above what the government provides. With the help of an experienced estate planning attorney, you can make sure you can provide for your loved one in your estate plan. Since many government disability programs are based on needs,  there are eligibility requirements and limits with regard to income and wealth.  Therefore, it is essential that you choose the right method for passing on wealth to your loved one in a way that does not harm their eligibility to receive the public program benefits they need.

Residents of Connecticut can call the Canton estate planning attorney at The Law Office of Brian S. Karpe for help with all estate planning and special needs planning requirements.

Special Needs Trusts Vs. Supplemental Trusts Explained

 Public benefit programs are helpful for individuals with disabilities to live their daily life, but the benefits are not robust. As a result, supplemental needs trusts were developed so that these individuals could have additional financial support in addition to their government benefits.

Over time both supplemental needs trusts and special needs trusts have come under the category of “special needs trusts”.  Accordingly, the term “supplemental needs trust” has fallen into disuse. The term “special needs trust” more specifically refers to attend to the special needs unique to their disability. A specially needs trust is centered more on the beneficiary, while the name “supplemental needs trust” concentrates more on the shortcomings of our public benefits programs.  However, currently the term “special needs trust” is most often used.

In terms of special needs planning, either a self-settled trust or a third-party trust can be used.  Which one is used is completely upon who created the trust and how it was funded.  A self-settled special needs trust is funded with the beneficiary’s own assets while a third-party trust is created and funded by someone else.

In conclusion, both supplemental needs trusts and special needs trusts fall have one ultimate goal. That is to help take care of an individual with disabilities while not negatively impacting  their benefits and  causing a penalty.

Estate planning can be complicated, and everyone has different needs and considerations. If you have a loved one that is disabled and you suspect they will need government benefits or are currently receiving them, it is important not to wait to ensure your estate plan incorporates special needs planning. Doing so in advance can help your loved one in the future and also allow them to obtain the benefits they are entitled to.

Speak to a Connecticut Special Needs Planning Attorney Today 

If you have questions about special needs planning, the Canton special needs planning attorney at The Law Office of Brian S. Karpe can discuss what options will work best for you to care for your disabled loved one. Call today to schedule a free consultation where you can go over everything at 860-217-1458.