What is a Supplemental Needs Trust?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 22 November 2018
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Also known as a special needs trust, a supplemental needs trust is a financial document that establishes a trust to provide ongoing support to an individual who is disabled. A trust of this type may be incorporated into a last will and testament, or be prepared as a stand-alone document. The laws that provide for the establishment of a supplemental needs trust vary somewhat from one nation to the next, although all versions contain a few basic elements.

In the United States, a supplemental needs trust is designed to provide ongoing assistance to any individual suffering from a physical or mental disability, or someone who has been diagnosed with an ongoing illness. The idea behind the trust is to ensure there are resources that will allow the individual to be cared for in a competent manner. With the US model, there is no limit on the amount of assets that may be placed into the trust. The assets in that trust can work in tandem with any government provided benefits that may be available to the individual, such as Social Security or SSI benefits, use of a Medicaid welfare program, or disability benefits provided to a war veteran.


There are several reasons to consider the establishment of a supplemental needs trust. For people who have a great deal of personal wealth, this type of trust arrangement can still be helpful, because many family and spendthrift trusts are not structured to meet special needs that may arise at some future point. For example, a family trust may provide a steady income, but if the recipient is permanently disabled, that amount may not be sufficient to meet the costs of home healthcare, special equipment, or other essentials that would allow the disabled individual to enjoy an equitable quality of life within his or her circumstances. In addition, assets in a supplemental needs trust are considered non-countable, which means they normally do not impact the ability of the individual to apply for and secure government benefits that are available to the disabled.

Another benefit of the supplemental needs trust is that the assets covered in the trust cannot be diverted to settle legal judgments in divorce actions, bankruptcies, and similar issues. This gives the approach a decided advantage over leaving assets to a caregiver in order to finance the ongoing care of a disabled loved one, since any assets left to the caregiver would often be considered eligible to settle judgments. With the supplemental needs trust, those funds are earmarked for the care of the recipient, and no other purpose.

The exact structure of a supplemental needs trust will vary, based on local laws that apply. Some trusts are configured with basic legal verbiage that is short and somewhat general. Other trust documents must be highly detailed in order to comply with current governmental regulations. For this reason, it is important to retain the services of a competent attorney when attempting to create this type of trust, ensuring that the document will comply with the laws of the land and provide the protection and security desired for the recipient.



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