Creating a Third-Party Special Needs Trust in a Will

A third-party special needs trust (SNT) is a valuable estate planning tool designed to provide for the financial and personal needs of individuals with disabilities without jeopardizing their eligibility for government benefits such as Supplemental Security Income (SSI) and Medicaid. Establishing this trust within a will ensures that resources are securely allocated to support a loved one with special needs while safeguarding their long-term financial and medical stability.

Unlike a first-party SNT, which holds the disabled individual’s own assets, a third-party SNT is funded with assets from someone else, typically a parent, grandparent, or other family member. Including the trust provisions in a will ensures that the trust is established upon the benefactor’s death, allowing the remaining estate to be seamlessly transferred into the trust. This structure ensures the funds are used for the beneficiary’s supplemental needs, such as educational programs, therapies, transportation, and recreational activities, while preserving their access to essential government programs.

When drafting a third-party SNT, several key elements must be considered. The trust should be irrevocable to prevent unintended changes that could disrupt the beneficiary’s financial security. It’s also important to appoint a reliable trustee who will manage the trust assets and make distributions in accordance with the trust’s terms and the beneficiary’s needs. Consulting an attorney who specializes in special needs planning ensures compliance with legal requirements and avoidance of mistakes that could disqualify the beneficiary from benefits.

Incorporating a third-party SNT into a will is an act of foresight and care. It provides peace of mind to families, knowing that their loved ones with disabilities will receive the support they need while maintaining financial stability and independence within the framework of public assistance programs.