CEA Special Needs Trust Planning 2

Question 1

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

Accepted Answer

Third-party SNT

Answer

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

Question 2

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

Accepted Answer

It must include a Medicaid payback provision

Answer

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.

Question 3

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

Accepted Answer

Under 65

Answer

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

Question 4

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

Accepted Answer

Supplemental education and recreational activities

Answer

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

Question 5

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

Accepted Answer

A provision preventing creditors from reaching trust assets

Answer

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

(CEA) Certified Estate Advisor Practice Test

(CEA) Certified Estate Advisor Practice Test

CEA Special Needs Trust Planning 2