My sister has a Supplemental Needs Trust established from funds left in a guardianship account for our mother who is deceased. She (my sister) has been on SSI all of her life because she is mentally challenged and cannot work.. She also has a daughter who is thirty and has a city job. It's just the three of us. I manage and do the account recording for the SNT. What happens to the SNT funds after she departs this earth? Will it go to Medicaid?

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Prince - SNT are a wonderful way to plan ahead but there can be an issue with Medicaid. I have a cousin who was a 1950's polio child and he has a SNT his parents (long ago deceased) did for him. His brother & 1 are on the trust as guardians in case he cannot do for himself. He is totally competent mentally but physically is limited as he has gotten the rebound polio effect. The SNT does not affect whatever he gets as far as his SSI. His SNT is to be distributed in whole to his next of kin (which is his daughter) but really if he lives a long time, he probably will outlive his trust. I anticipate it happening within 10 years (I'm a conservative investor) but everybody else thinks that won't happen....we'll see. But if it does, then the trust then becomes unfunded as there is no income to maintain it.

So you need to look at how the trust is performing (how it is invested) and what the anticipated zero point is. The trust has to have income being made in order to continue to live, so how is all that going?

My cousin still lives at home and so is NOT on Medicaid for NH or for other services. He is on Medicare for medical stuff. What is our understanding is that IF he later on needs to go into a NH and applies for Medicaid to pay for the NH, then any revocable cash value in the SNT will have to be used in the spend-down. This is similar in how Medicaid looks at term life insurance policies VS. whole life insurance policies. Term has no cash value so is ignored by Medicaid while a whole life policy has a cash value. So the whole life policies have to be cashed in before Medicaid will pay. Same for a cash value funeral policy.

If you look at the SNT and don't understand what's what, then really you need to schedule an appointment with the attorney who drew up the SNT. Good luck.
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Excellent question! I wrote a Supplemental Special Needs trust for my son. The trust says that any funds left after his passing will go to my living nieces and nephews. I hope Estate Recovery doesn't try to get it. Does she have a guardian to look out for her if the time comes when you can't? Does she have a will? Have burial arrangements been made and paid for? Lot's of questions...I would ask the lawyer who drew up the trust or, if that's not possible, find a lawyer who could review the trust and answer the questions.
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