When Should a Special Needs Trust Be Updated?

By Daniel M. Surprenant, CELA 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 […]


July 2018 - Vol. , Issue

By Daniel M. Surprenant, CELA

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.

  • Beneficiary’s situation – Has your family member’s health changed? Do they have new living arrangements, perhaps having moved to another state? Have their public benefits significantly changed? Any of these circumstances could trigger the need to amend the SNT. They may now have additional needs for support, while government benefits and SNT regulations may differ in a new state.
  • ABLE accounts – These accounts may be a good complement to the SNT. Funds held in them, as with SNTs, aren’t counted when establishing eligibility for means-based government benefits. In addition, they can be managed by the beneficiary, but there are strict requirements for their use. You may want to set up a plan to periodically distribute SNT funds to an ABLE account.
  • Financial circumstances – Stock market volatility, unanticipated expenses, a new job and more can bring change to your personal finances. You may want to reassess which assets should be held by the trust. At the same time, you might want to revise trust language, or an accompanying letter of intent, concerning priorities for the trustee to consider when making distributions on behalf of the beneficiary.
  • Family changes – Births, deaths and marriages since the SNT was created may be reasons to change your allocation of assets to the trust.
  • Trustees and/or advisory committee members – Individuals who were once appropriate advocates for your child with special needs may no longer be a good fit for that responsibility.

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.


About this Newsletter: We hope you find this newsletter useful and informative, but it is not the same as legal counsel. A free newsletter is ultimately worth everything it costs you; you rely on it at your own risk. Good legal advice includes a review of all of the facts of your situation, including many that may at first blush seem to you not to matter. The plan it generates is sensitive to your goals and wishes while taking into account a whole panoply of laws, rules and practices, many not published. That is what The Special Needs Alliance is all about. Contact information for a member in your state may be obtained by visiting the Special Needs Alliance online.


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2019-08-26T19:16:04+00:00

5 Comments

  1. Marshia L Walker July 28, 2018 at 10:10 pm

    I want to move to Atlanta Georgia I have guardianship of my great nephew because his grandmother passed away she had. She love him but I have chronic arthritis and I hear that the weather there is beautiful would like to move there how do I get guardianship for him in the state there

  2. John Whittenberger October 6, 2018 at 7:16 pm

    My friend has an ABLE account and a Third Party SNT trust.

    The article says “You may want to set up a plan to periodically distribute SNT funds to an ABLE account.”

    How would this work?

    • Daniel M. Surprenant October 9, 2018 at 2:43 pm

      Hi John, How it would work depends greatly on the specifics of your situation. Generally speaking, there could be distributions by check or electronic transfer to an ABLE account, to be controlled by the beneficiary. How and even if that should be done should be reviewed by a qualified special needs planning attorney after he/she has all the background facts. I encourage you to see the SNA “Find a Lawyer” link and setup a review. Hope that is helpful.

  3. Luchia October 7, 2018 at 10:01 pm

    The trustee put my as I bennifits in jeopardy.

  4. Dana Johnston October 22, 2018 at 9:54 pm

    I moved my son to Iowa almost 6 years ago. We had special needs trust set up in Louisiana in 2011. Medicare, Medicaid and blue cross had liens on his settlement. Which they received. Now the state of Iowa sees he has a special needs trust and they are saying he has over $2,000 and will lose his benefits as of Nov. 1 if I don’t spend it down. I faxed his trust documents to them and they still denied it. Called his attorney back home and they sent me amendment. Is this all I need for him to keep his benefits or should I seek a lawyer here? It states in original documents that his trust will not affect his benefits previous or future.
    Thank you Dana Johnston

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