What Advice Do I Give to Clients?

Include Special Needs Trust Planning in Your Revocable Living Trust

If you created your estate planning, you likely have heard of special needs planning.

You know you should plan for a beneficiary who has special needs by creating a special needs trust (SNT) to hold their inheritance otherwise the special needs beneficiary might lose the governmental benefits.  But what about including contingent SNT provisions in your revocable living trust? Let’s talk about what exactly this type of planning is and why it is important.

When you created your revocable living trust (RLT), you likely had beneficiaries who are individuals with no special needs. However, these individuals could later become incapacitated and in need of public benefits, later at the time when they receive the inheritance from you.

Many public benefits have resource limits and thus, the inheritance could disqualify the beneficiary from receiving further public benefits.  In order to curtail this possibility, you can include contingent SNT provisions in your trust. These provisions say that if the beneficiary is on public benefits, their share will be held according to the SNT provisions.

The SNT provisions are designed in a way so as to allow the beneficiary to benefit from the trust property (their inheritance) but still maintain eligibility for public benefits.

The two types of distribution standards are supplemental or supplemental and discretionary. The former only allows the Trustee discretion to distribute trust property in a manner that would not decrease the beneficiary’s public benefits; the latter would allow the Trustee to distribute in a way that would supplant the beneficiary’s public benefits. (If the SNT beneficiary is not receiving public benefits, then the distribution standard is wholly discretionary.)

Why is it important to include contingent SNT planning in your revocable living trust?  Because it is in your beneficiary’s best interest, as the provisions protect them and their inheritance received from you.

Unless your beneficiaries are only charitable organizations, it is strongly recommended that you include contingent SNT provisions in your Revocable Living Trust and Last Will and Testament.

The reason for creating a comprehensive estate plan, with a Revocable Trust, A Last Will and Testament, and all Power of Attorneys, is that you protect yourself and your beneficiaries in the future, thus, including SNT provisions that provide protection. It does no harm to have the provisions in the document if not need them but could do a lot of harm if they were needed and not there.

My advice: Check your estate plan and make sure you have SNT provisions in your RLT and Last Will and Testament, call your attorney and check, or call us VM Gokea – The Inheritance Lawyer™  (631) 823-1680.