[WSBAPT] Self-Settled SNT Question

[sdonahue at sdonahuelaw.com]

Hello David,

 

Depending upon the language of the SNT, the trustee can make a decision to pay additional rent in order to secure a suitable dwelling for the beneficiary.  That is what the SNT trust is for—to provide additional support for the beneficiary that is in the beneficiary’s best interest.  I would say that the trustee could make that determination and provide the extra rent.

 

 

 

SUSAN DONAHUE

Law Office of Susan Donahue

125 West 2nd Avenue, Suite “B”

P.O. Box 81

Twisp, WA 98856

(509) 996-5944 (phone)

(509) 362-9692 (fax)

 <mailto:sdonahue at sdonahuelaw.com> sdonahue at sdonahuelaw.com

 

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of David Faber
Sent: Monday, December 6, 2021 2:07 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: [WSBAPT] Self-Settled SNT Question

 

(C)lient's (D)aughter is a disabled person. D inherited ~$100k in securities about 10-15 years ago and C worked with another attorney to establish a self-settled special/supplemental needs trust (SNT) for the securities at that time so that D could continue to receive public benefits. C owns the house that D lives, all under C's revocable living trust (that, at C's death, will fund a separate SNT created for D that is not subject to the payback provision and has other residuary beneficiaries). D's house now is in need of some substantial work (the roof needs replacing). C is struggling to afford to pay for the repairs and wants to take money out of the SNT to pay for it. My concern is that taking money out of the SNT to provide for the upkeep of an asset owned by C would be a disallowed use of the resources and, in the case of C's death, could even subject some of C's assets to the payback provision in the existing SNT.

 

My first question is: do I have the right of it or am I overthinking this?

 

My proposed course of action is to have a supplemental lease signed between the SNT and C to charge the SNT some supplemental rent (D is currently paying C rent from D's SSDI in the amount of about $350/month) to be commensurate with market rent locally (probably an additional $400/month wouldn't even begin to raise eyebrows in our current rental market), with the rental agreement expressly finding that it is a supplemental expense not covered by D's existing public benefits, thereby providing C with some additional resources to pay for needed repairs on D's home. 

 

My second question (presuming I am correct in my thinking in response to my first question) is: does anyone with knowledge about self-settled SNTs think this is a workable approach or do you have any other suggestions for how to make this square?

 

Thank you.

 

Best,

David J. Faber

Faber Feinson PLLC

800 Polk Street, Suite B

Port Townsend, WA 98368
(360) 379-4110

 

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