Special needs trusts (also called supplemental needs trusts, supplemental benefits trusts, and SNTs) are used to set aside money for a disabled person to supplement rather than supplant government disability programs like Medicaid and Supplemental Security Income (also called SSI). Many attorneys create special needs trusts, but not all lawyers who draft SNTs have expertise in special needs.
So why does it matter? Several reasons. A lawyer who is learning on the job may not produce a special needs trust that meets your needs. In fact a poorly drafted trust may even disqualify the beneficiary for SSI and Medicaid.
Generic form “one size fits all” special needs trusts may be unnecessarily inflexible and may not satisfy requirements of agencies like the Division of Developmental Disabilities and Board of Social Services. A special needs trust must comply with applicable program rules, which can differ from program to program such as Medicaid, Supplemental Security Income, Section 8 housing, and SNAP (formerly called food stamps).
An inflexible SNT may not meet your loved one’s special needs. For instance, a form SNT may prohibit expenditures for support– in which case the special needs trust can’t help with rent. This may lead to your disabled loved one losing his/her home or an expensive court proceeding to reform the special needs trust. The likely cost would far exceed legal fees to draft the SNT properly in the first place.
Unfortunately, we at FriedmanLaw have seen SNTs drawn by attorneys without special needs experience make the costly mistake of including a Medicaid pay-back provision even though pay-back is not required because the trust will be funded entirely by parents and grandparents. (A special needs trust is required to repay Medicaid when the disabled beneficiary dies only if the trust contains amounts attributable to the disabled beneficiary such as a law suit recovery.) The effect is to require payment to Medicaid of money that could go to loved ones instead.
We could go on and on about the issues inherent in drafting a special needs trust that meets your needs, but by now you probably get the idea. It is penny wise and pound foolish to have your special needs trust drafted by a lawyer without expertise in SNTs.