- Special Needs Alliance - https://www.specialneedsalliance.org -

When Should a Special Needs Trust Be Updated?

By Daniel Surprenant, CELA [1]

Special needs trusts (SNTs) are financial instruments designed to enhance quality of life for individuals with disabilities by supplementing the government benefits available to them. Assets held in SNTs aren’t counted when determining an individual’s eligibility for means-tested public programs such as Medicaid and Supplemental Security Income (SSI). Since personal circumstances change, it sometimes makes sense to update an SNT. But how can you tell when it’s time to modify one?

First party SNTs, which are funded with the beneficiary’s own resources, are irrevocable, meaning that they can’t be revised. But third party SNTs, which hold funds that originated with someone other than the beneficiary, can be structured to be revocable, so they can be altered. While it’s a good idea to review an SNT on your own each year, you generally won’t need to amend it unless you or the beneficiary have experienced major changes in your personal circumstances.

A third party SNT shouldn’t be considered a static document. It’s a blueprint for the beneficiary’s financial security. Keeping it current is important for its long-term effectiveness.