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ElderDocx Update Includes Change to Third-Party Supplemental Needs Trust

The ElderDocx Third-Party Supplemental Needs Trust was recently modified to accommodate multiple trustmakers and multiple beneficiaries. Prior to these changes, the trustmaker had to be either an individual or a married couple, and there could be only one beneficiary. Now any number of people, whether related or not, can create a trust for any number of beneficiaries, whether related or not. It provides a lot of flexibility in planning. 

For example, in those states where irrevocable trusts, like the ElderDocx Medicaid Asset Protection Trust, are not viewed favorably and are almost always counted as an available resource, children could create a Third-Party Supplemental Needs Trust for their parents, and the parents could make gifts to their children. When doing this, it's very important that the creation of the trust and the gifts from their parents are independent acts to avoid the issues present in Hedlund v. Wis. Dept. of Health Services.

Note that ElderCounsel doesn't favor direct gifts where there is an alternative. Gifting through an irrevocable trust allows the grantor to retain a limited power of appointment, which causes estate inclusion, which in turn causes an adjusted basis at the grantor's death. This can't be done with a direct gift. Further, a direct gift is subject to the donee's creditors, whereas a trust can be structured to protect the assets from the beneficiary's creditors.

The changes to the Third-Party Supplemental Needs Trust allow any number of people to create a trust for any number of beneficiaries, leading to some other creative solutions. Maybe siblings want to create a trust for their disabled sibling. Or perhaps a group of friends want to create a trust for a disabled friend. There's a lot of flexibility with this new design.

ElderDocx® puts smart, efficient legal document preparation at your fingertips. Throughout the software you'll find help videos like the one below. These videos have been created to give the attorney drafting the document more details about the topic they are working on in the system at that time. Request a demo to see how ElderDocx can help you serve clients and save time.

 
 
 
 
 
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Wistia video thumbnail - 3rd-Party SNT v. Self-Settled SNT (d4A)
 

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