How should my Special Needs Trust (SNT) be used?

Special needs trusts (SNTs) are great tools, but fickle creatures.  They are kind of like the Wizard pocket organizer from Seinfeld.  For those Seinfeld junkies, you will remember the Wizard as the pocket organizer that Jerry gave to his dad who proceeded to only use it as a tip calculator to which Jerry would always yell, “It does other things”.  SNTs are like the Wizard (or the Willard if you got one from Bob Sacamano, Sr., but I digress), everyone has one (or should have one), but do they know how to use it?

The number one thing that you SHOULD NOT do with a SNT, is take cash out of it and give it to the beneficiary.  This is a terrible idea.  Any cash distributions will reduce SSI benefits on a dollar for dollar basis.  Do you see why this is a terrible thing to do?  Good, so just don’t do it.

The second thing you probably SHOULD NOT do is pay for things like food, shelter, and utilities.  Remember, a significant portion of the benefits that your beneficiary is receiving are for things like food, housing, utilities, etc.  The point of the SNT is to SUPPLEMENT your beneficiaries benefits, not replace them.  If you wanted to use money on necessities, then bag the benefits and just pay out of pocket.  That doesn’t make a whole lot of sense, so don’t do it.  Paying for necessities will incur a similar reduction in benefits.  So what can you do?

You can do pretty much anything else.  Use the SNT for its purpose, to enhance your beneficiaries life and experiences.  Be a good steward of the assets, but at the same time, allow your beneficiary to enjoy a full and rich life that they otherwise wouldn’t be able to experience.

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