Third-Party Special Needs Trusts: The Basics

A third-party special needs trust is for parents, grandparents, family members and friends who want to provide for a person with special needs without disqualifying or interrupting public benefits. “Inherited” money is held, protected and administered to the individual with a disability in a professional, caring and cost-effective manner.

A Special Needs Trust (SNT) is a special type of trust that enables an individual with a disability (the beneficiary) to benefit from the assets held in the trust, but those assets are not “counted” for the purposes of determining if that beneficiary is eligible for governmental benefits such as Medicaid or Supplemental Security Income (SSI).

While some parents or grandparents may think that they must disinherit a family member with special needs so they won’t lose benefits, this is not necessarily the case. You can speak with one of our estate planning attorneys to learn what options you may have!

The Third-Party Pooled Guardian Special Needs Trust was created to give an option to join an already established, professionally managed SNT. This alleviates you of the burden of personally managing your loved one’s SNT.

These Trustees of the Third-Party Pooled Guardian SNT have extensive experience in the proper management and utilization of your loved one’s assets, providing for the beneficiary’s needs while ensuring that the assets will not be used in a way that interferes with Medicaid or SSI.

A crucial part of any SNT is the proper financial planning for your loved one’s assets. The Investment Advisor for the GSNT uses their experience dealing specifically with the financial needs of individuals with disabilities and ensures the assets are invested and managed with the primary focus being the beneficiary’s personal needs and goals.

What Language Is Needed for My Will/Trust to Fund an Account with a Third-Party Pooled Guardian Special Needs Trust?

Below is sample language your attorney can use to draft provisions to fund a Third-Party Pooled Guardian Special Needs Trust sub-account for your loved one, using your Will or Trust.

“I give and bequeath (the sum of $___________OR ____%) of my estate to the Trustees of The Guardian Special Needs Trust dated February 28, 2022 (“the Trust”), as Trustees for the benefit of________________________, the beneficiary of this share.

Said funds to be held in Trust for the uses and purposes and upon the terms contained in the Trust, and further subject to the following terms and conditions. (Attorneys may wish to add specific clauses with respect to their client’s wishes)

Upon the death of the said beneficiary, the principal and income then remaining, after the application of Sections 6.1 and 6.2 of the Trust, shall be paid as follows:

____________________________________”

Requirements for Third-Party Pooled Special Needs Trust Membership:

The Beneficiary must meet the Social Security definition of disabled. The Social Security definition is as follows:

• Disability under Social Security is based on your inability to work. We consider you disabled under Social Security rules if you cannot do work that you did before and we decide that you cannot adjust to other work because of your medical condition(s). Your disability must also last or be expected to last for at least one year or to result in death.

• The Joinder Agreement must be signed by the Grantor.

• The cash/liquid assets are then used to fund the Beneficiary’s Sub-Account.

• The Beneficiary’s Sub-Account must be established for the sole benefit of the Beneficiary.

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