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Why every will needs a supplemental needs trust provision

Your client asks why her 35-year-old bipolar daughter no longer qualifies for SSI or Medicaid and has been warned to leave her Section 8 apartment.

It turns out that the client’s recently deceased brother left $50,000 to each nephew and niece, making the daughter ineligible for key government benefits.

As often happens with incapacitating disorders, the daughter's schizophrenia didn't manifest until later in life. But, as Carl M. Webber and J. Amber Drew explain in the latest ISBA Elder Law newsletter, "[a]ny beneficiary can become disabled at any time. A will speaks as of the future date of death and should protect beneficiaries who may become disabled during the time between the execution of the will and the death of the testator."

How to do it? "In all cases, a will should include a paragraph that allows the executor to set up Supplemental Needs Trusts, if, at the time of the death of the testator, any beneficiaries qualify under the Social Security Administration’s definition of 'disabled,'” they write. Find out more and view a sample trust provision.


Posted on May 16, 2013 by Mark S. Mathewson

Member Comments (3)

Remember too that the Illinois trust decanting statute strongly favors and facilitates creation of supplemental needs trusts. 760 ILCS 5/16.4.

This makes great sense to me, but it was something I never really contemplated. I do not handle estate planning but have an interest in developing skills to begin doing that with other elder law issues. I see a growing need for the growing and retiring baby boomers. Thanks Carl for a concise explanation and example.

My mom already tried to do that with my special needs nephew. SSI called him up soon as they found the account via his ssn which the bank disclosed within weeks. They said "no dice". If money is found in a trust anywhere with any provisions they cut his SSI. She pulled the $20,000 immediately. They didn't care if it was revocable, irrevocable or whatever. As long as the disabled's ssn is on the account as beneficiary (which banks are required to do), they pull it. I think they said the limit for him was $2,000 so she just gave to to a parent outright instead.