Practice Test Geeks(CEA) Certified Estate Advisor Practice Test
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Special Needs Trust Planning Flashcards

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  1. Which type of Special Needs Trust is funded with assets that belong to a third party, such as a parent or grandparent?

    Answer: Third-party SNT

    A third-party SNT is funded with assets owned by someone other than the beneficiary, such as an inheritance from a parent.

  2. What is the primary disadvantage of a first-party Special Needs Trust compared to a third-party SNT?

    Answer: It must include a Medicaid payback provision

    First-party SNTs funded with the beneficiary's own assets must include a Medicaid payback provision that reimburses the state upon the beneficiary's death.

  3. Under current law, what is the age limit for establishing a first-party (d)(4)(A) Special Needs Trust without court involvement?

    Answer: Under 65

    A first-party SNT under 42 U.S.C. § 1396p(d)(4)(A) must be established before the beneficiary reaches age 65.

  4. Which of the following expenses is generally APPROPRIATE for a Special Needs Trust to pay?

    Answer: Supplemental education and recreational activities

    SNTs should pay for supplemental items like education and recreation that enhance quality of life without replacing government benefits.

  5. What is a 'spendthrift clause' in a Special Needs Trust?

    Answer: A provision preventing creditors from reaching trust assets

    A spendthrift clause protects trust assets by preventing creditors of the beneficiary from attaching or garnishing trust funds.

  6. Which of the following individuals CANNOT serve as the trustee of a Special Needs Trust?

    Answer: The beneficiary with a disability

    The beneficiary with a disability generally cannot serve as their own trustee because doing so would give them control over the assets, which could disqualify them from means-tested benefits.

  7. A pooled Special Needs Trust is administered by which type of organization?

    Answer: A nonprofit organization

    Pooled trusts under 42 U.S.C. § 1396p(d)(4)(C) are established and managed by nonprofit organizations that pool resources for investment purposes.