Did you know that 61 million adults in America live with special needs or disabilities?
You may have heard of special needs trusts and supplemental needs trusts, but do you know the difference between the two?
If you’re like most people, you probably don’t know the difference. That’s because these two types of trusts are often confused with each other.
But don’t worry. Keep reading to find out exactly what the differences between special needs trust vs supplemental needs trust are.
What Is the Special Needs Trust?
Also known as a (d)(4)(A) trust, this is an irrevocable trust created for the benefit of a disabled person. The trustee manages the assets in the trust for the beneficiary’s benefit.
The trustee can use the assets in the trust to pay for the beneficiary’s supplemental care and quality of life needs that are not covered by government benefits.
What Is the Supplemental Needs Trust?
Also called a (d)(4)(C) trust, this is an irrevocable trust created for the benefit of a disabled person. The trustee manages the assets in the trust for the beneficiary’s benefit.
The trustee can use the assets in the trust to pay for the beneficiary’s supplemental care and quality of life needs that are not covered by government benefits.
The Difference Between the Two Trusts
There are a few key differences between the two trusts. Let’s look at them now in more detail:
1. Who Can Create the Trust
A special needs trust can be created by anyone, including the disabled person themselves, their parents, grandparents, or a court. A supplemental needs trust must be created by a parent, grandparent, or court.
2. How the Trust Is Funded
A special needs trust can be funded with the disabled person’s own assets or with assets from someone else, such as a parent or grandparent. A supplemental needs trust must be funded with someone else’s assets.
3. When You Can Use Trust
You can use a special needs trust immediately upon creation. You cannot use a supplemental needs trust until the disabled person reaches the age of majority (18 in most states).
4. How They Protect the Assets in the Trust
They protect the assets in a special needs trust from counting it as income or assets for purposes of government benefits eligibility. The assets in a supplemental needs trust are not protected.
And maybe counted as income or assets for purposes of government benefits eligibility.
If you’re looking for professional advice, be sure to talk to some special needs attorneys.
Special Needs Trust vs Supplemental Needs Trust: Which One Is Right for You?
So there you have it! You now know the differences between special needs trust vs supplemental needs trust. We hope you can use this information to choose the one that is right for you!
If you’d like to learn more, please check out our blog for more special needs trust tips!
Also, don’t forget to share this with anyone you know who is looking to learn more about these different trusts.