Special Needs Trust Planning Flashcards
7 cards from real CEA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Special Needs Trust Planning flashcards as text
A testamentary Special Needs Trust is created by which legal instrument?
Answer: A will
A testamentary SNT is established through a will and takes effect only upon the death of the person who created the will.
What is the primary advantage of establishing a Special Needs Trust as a standalone inter vivos trust rather than a testamentary trust?
Answer: It can receive assets during the grantor's lifetime, including gifts and inheritances
An inter vivos SNT is created and funded during the grantor's lifetime, allowing it to receive contributions from multiple sources such as gifts, life insurance, and inheritances.
Which type of trust can accept assets for multiple beneficiaries with disabilities, pooling investments while maintaining separate accounts?
Answer: Pooled (d)(4)(C) trust
A pooled trust under (d)(4)(C) aggregates funds from multiple beneficiaries for investment purposes while maintaining separate sub-accounts for each individual.
When naming a successor trustee for a Special Needs Trust, what is the most critical consideration?
Answer: The successor must understand both disability law and the beneficiary's unique needs
A successor trustee must understand the complex intersection of disability law, government benefits, and the individual beneficiary's circumstances to administer the trust properly.
Under the SSI resource rules, what is the current individual resource limit that makes an SNT necessary for benefit preservation?
Answer: $2,000
SSI recipients are limited to $2,000 in countable resources for individuals, making an SNT essential for holding larger amounts without disqualifying the beneficiary.
What is a 'trust protector' in the context of Special Needs Trust planning?
Answer: A third party with the authority to modify or oversee the trustee's actions
A trust protector is an independent third party given specific powers such as modifying trust terms, removing trustees, or adapting the trust to legal changes.
Which situation most clearly demonstrates the need to coordinate SNT planning with Medicaid rules in a beneficiary's state?
Answer: Medicaid rules vary by state, affecting what the SNT can and cannot pay for
Medicaid is a joint federal-state program with significant state-by-state variation, requiring advisors to understand the specific rules of the beneficiary's state when planning SNT distributions.