Also known as:supplemental needs trusts · supplemental-needs trust · SNT · special needs trust
Written by attorneys · grounded in primary & secondary sources — see below
A trust established for the benefit of a disabled person that supplements public benefits without increasing countable assets or resources that would disqualify the beneficiary from government assistance. The trust must be funded with assets of someone other than the beneficiary and must limit distributions to needs the state does not cover. Proper structure prevents the state from reaching trust assets for reimbursement.
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How it applies
Common Examples
2
Disability Prompts Remainder Conversion
Samantha Stone created a trust directing outright distribution of business assets to her son Seth Shapiro at age twenty-five. After Seth reached that age but before distribution, a severe brain injury left him unable to manage the assets and dependent on public benefits. The trustee petitioned the court to convert the outright remainder into a supplemental needs trust. The court authorized the change because the injury was unanticipated and the modification preserved assets for Seth while advancing the settlor's purpose of providing long-term support.
Court Approves Special Needs Structure
Stephen Shaw established a trust directing outright distribution of royalty interests to his daughter Serena Soto. Years later Serena suffered a catastrophic stroke that left her permanently disabled and reliant on means-tested benefits. The trustee petitioned to convert her remainder into a supplemental needs trust funded by the royalty streams. The court granted the petition because the disability was unforeseen and the structure better fulfilled the settlor's intent to secure lifetime support without asset dissipation.
Riddell, In re157 P.3d 888 (Wash. Ct. App. 2007)
Common questions
Frequently Asked
4
What distinguishes a supplemental needs trust from a support trust?+
A supplemental needs trust limits distributions to needs the state does not cover and is funded by a third party, so the state cannot reach the assets. A support trust allows the beneficiary to compel distributions for basic needs, exposing assets to state claims. The settlor's intent to provide only supplemental benefits determines the classification.
Supporting sources
Can a court convert an outright remainder into a supplemental needs trust?+
Yes when circumstances not anticipated by the settlor arise and the modification furthers the trust's purposes. Modern equitable deviation doctrine permits altering dispositive terms, including converting an outright remainder into a supplemental needs trust for a disabled beneficiary. The change preserves assets and eligibility for public benefits while advancing the settlor's core intent.
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Must the trust be funded only with third-party assets?+
Yes. Assets contributed by the beneficiary herself disqualify the trust from supplemental needs treatment. Third-party funding ensures the assets remain unavailable for counting toward public benefits eligibility and prevents state reimbursement claims at the beneficiary's death.
Supporting sources
Does the state ever reach assets in a properly drafted supplemental needs trust?+
No when the trust is funded by a third party and restricts distributions to supplemental needs. The structure prevents the assets from counting as available resources for Medicaid or SSI. The state cannot compel distributions or claim reimbursement from the trust corpus at the beneficiary's death.
Supporting sources
Trusts and Estates Trusts and Future InterestsTrusts · ModificationUBEFoundational