Supplemental Needs TrustThe quick answer is that it depends on the source of funds used to create the trust.

Before we get too much further in, let me give you the definition of a Supplemental Needs Trust or a Special Needs Trust. A Supplemental Needs Trust is a trust that is designed to protect assets for an individual with a disability. These trusts protect the eligibility for government benefits that are asset and income based. These trusts supplement what is available under the government benefits without jeopardizing these benefits.

It is important to realize when to use a payback provision in a Supplemental Needs Trust and when it is unnecessary. A payback provision is required when the supplemental needs trust is funded from the assets of the individual with a disability. This trust must include a provision regarding paying back the state for any benefits paid on that individual’s behalf. If the trust is funded by a third party, this provision is not required.

Whether it’s necessary to include a payback provision often confuses clients and even professionals, who are not experienced in this area. I have heard of a situation where a mother decided not to leave assets to the disabled child, because she is concerned about the payback provision applying. She was not given correct information. Because any trust set up by the mother is a third party supplemental needs trust, no payback is required. If a payback provision is included when it is not necessary, then assets that should have gone to the family or other designated beneficiary will instead be paid to the state.

Office Hours

Monday: 8:30am - 5pm
Tuesday: 8:30am - 5pm
Wednesday: 8:30am - 5pm
Thursday: 8:30am - 5pm
Friday: 8:30am - 5pm

Denton

Monday – Friday, 8:30 – 5:00 p.m.

Aubrey

By Appointment Only

Bartonville

By Appointment Only
Leigh Hilton P.L.L.C
FOLLOW US ON: