At the Estate Planning and Elder Law Offices of Gerhard & Gerhard, P.C., we frequently assist clients in Montgomery County, Philadelphia County, and Bucks County, Pennsylvania with the creation, modification, and—when appropriate—the termination of Special Needs Trusts (SNTs). While these trusts are designed to provide long-term support for individuals with disabilities, there are situations where terminating the trust may be the best course of action.
Below are five common scenarios where it may be appropriate to terminate a Special Needs Trust:
1. The Beneficiary No Longer Qualifies for Government Benefits
If the beneficiary’s condition improves or their financial situation changes such that they no longer qualify for means-tested government benefits like SSI or Medicaid, the trust may no longer be necessary.
2. The Trust Is Too Small to Be Practical
In some cases, the trust’s assets are too limited to justify the ongoing administrative costs. If the trust is no longer financially viable, termination may be advisable.
3. The Beneficiary Has Passed Away
Upon the death of the beneficiary, a Special Needs Trust typically terminates. The remaining assets are distributed according to the trust’s terms, including any Medicaid payback provisions.
4. The Trust No Longer Serves Its Intended Purpose
If the trust is no longer fulfilling its original purpose—whether due to changes in the beneficiary’s needs or changes in the law—it may be appropriate to petition the court for termination.
5. A More Suitable Planning Option Becomes Available
Sometimes, a pooled trust or other planning tool may better serve the beneficiary’s needs. In such cases, terminating the existing trust and transferring assets may be a strategic move.
Need to Terminate a Special Need Trust?
Terminating a Special Needs Trust requires careful legal analysis and, in many cases, court approval. If you believe your trust may no longer be appropriate and needs to be terminated, contact our office to schedule a consultation. We proudly serve clients in Montgomery, Philadelphia, and Bucks Counties. Click here to contact Gerhard & Gerhard, P.C. and schedule a consultation today.
