What Is a Supplemental or Special Needs Trust and What to Know About Them in Massachusetts

A Supplemental Needs Trust (SNT), often referred to as special needs trust, is a valuable estate planning tool designed to hold money or assets for a person with a disability while preserving and maintaining their eligibility for any means-based benefits like SSI (Supplemental Security Income) or Medicaid / MassHealth. A SNT allows you to support your loved ones that have a disability without interfering with any public support or benefits that they are currently receiving or may need in the future.

Rather than leaving your assets directly to the beneficiary in your estate plan, those assets are instead distributed to the SNT created for their benefit. A qualified Trustee then manages the trust assets, and makes discretionary disbursements that are designed to “supplement” the beneficiary’s needs, rather than supplant those public benefits altogether. As a result of titling the assets in the SNT rather than in the beneficiary’s individual name, those assets are not treated as countable assets for the purposes of any public benefit programs such as SSI or MassHealth.

Why Create a Special Needs Trust in Massachusetts?

1. Protect Eligibility for MassHealth and SSI

Many individuals with disabilities or special needs rely on MassHealth (the Medicaid program in Massachusetts) or SSI for necessary health care costs, long-term support, housing assistance, and more. These programs are means-based, meaning there are strict eligibility limits on the income and assets a beneficiary can own in order to qualify.

• For instance, if the beneficiary’s countable assets exceed program limits (often very modest), they may lose coverage. The threshold to qualify for MassHealth requires an individual have no more than $2,000 dollars in assets.
• Placing assets into a SNT properly ensures they are not considered part of the beneficiary’s personal assets for eligibility purposes. This is because assets held in Trust are controlled by the Trustee, rather than the beneficiary. Therefore the beneficiary does not have direct access to assets held in the trust, and the Trustee is typically granted discretion to make disbursements for the beneficiary’s health, education, maintenance, and support (HEMS).

As a result, while your intentions and heart are in the right place to leave assets to a loved one with a disability, leaving them to the individual directly could have severe ramifications, causing them to lose access to valuable benefits and services. A SNT can be incredibly valuable to families that wish to provide extra financial support to a loved one, without jeopardizing the safety net and eligibility the beneficiary actively depends on.

2. Enhanced Quality of Life Through Distributions

While benefits programs cover essential needs, they are often limited in scope (medical care, basic living support, necessities such as food and housing, etc.). A properly drafted SNT grants the Trustee the power to use funds for supplemental expenses, geared towards enhancing the beneficiary’s overall quality-of-life. These can include but are not limited to expenses such as:

• Therapy or medical services not covered by insurance
• Specialized equipment, assistive devices not already covered
• Education, training, or enrichment programs
• Transportation, recreation, technology, and personal care items
• Purchasing a home, or home improvements or repairs (so long as the occupants pay rent)
• Furniture or general household items
• Automobiles
• Recreational activities, entertainment, experiences, etc.
• Travel or vacations
• Telephone services or streaming services

As long as distributions are managed carefully to avoid converting the trust into countable income for the beneficiary, they can substantially improve daily life. Most notably, certain disbursements that would reduce any SSI benefits include groceries, or cash disbursements.

3. Flexible Trustee Control & Protection

A SNT Trust is created just like any other Trust, where the “Settlors” create and fund the Trust and the “Trustee(s)” manage, protect, and carry out the terms of the Trust. For a detailed overview outlining how to decide on whether to name an individual or a professional Trustee, you can read our legal blog here. When creating the Trust and thinking about who to name as Trustee, you can:

• Name a close family member or friend to serve as Trustee. Alternatively, you could name a professional with expertise in managing SNT’s;
• Provide clear direction for how and when distributions can be made, leaving no ambiguities;
• Appoint Successor Trustees to ensure continuity even if the original Trustee is no longer able or willing to serve (due to death or incapacity);
• Impose oversight mechanisms to ensure funds are managed and invested prudently, and distributed responsibly

This helps protect the beneficiary from misuse of funds, poor decision-making, or jeopardizing their eligibility. It also ensures that the trust assets are managed with the intention of maintaining the funds for as long as possible, in an effort to prolong the supplemental benefits that the beneficiary will receive throughout their lifetime.

Contact our Experienced Estate Planning Attorneys Today to Create a Supplemental Needs Trust for Your Loved One

A Supplemental/Special Needs Trust is a powerful, sophisticated tool that allows families in Massachusetts to support a loved one with disabilities without sacrificing critical public benefits. With careful drafting, proper Trustee management, and coordination with state-specific rules, a SNT can provide security and peace of mind for families across the Commonwealth.

If you’re considering support for a family member with special needs, now is the time to explore how a Special Needs Trust could be incorporated into your estate plan. Contact the trusted and experienced attorneys at Lane, Lane & Kelly, LLP in Braintree, Massachusetts to setup your free consultation today.