The need for Supplemental Needs Trusts has grown significantly over the last several years and having tools to handle these trusts has become a necessity for small and large firms alike. Cowles Trust Plus software includes tools to allow you to draft and create third party supplemental needs trusts (SNT) using a variety of options.

Irrevocable Supplemental Needs Trust: This option is appropriate when a client wants to establish a separate trust for a disabled beneficiary. This trust removes assets placed in the irrevocable SNT from the client's taxable estate and insures that the assets will be available for the beneficiary despite future developments in the client's lifetime. This option may be funded by the client during his/her lifetime and additional contributions may be made by others who may want to add funds to the trust. The irrevocable SNT may also be used as a "shell" with eventual funding through the client's revocable trust or will. In this way, after the revocable trust or will is administered, the SNT will stand alone with the separate SNT the only document which needs to be reviewed by government agencies for purposes of determining benefits. This template includes these features:

• Numerous phrase choices addressing areas such as:
• The degree to which distributions may be made, with safeguards so that entitlements will not be jeopardized.
• Provisions during the life of the lifetime beneficiary - general or detailed
• Authorization to provide housing for the lifetime beneficiary
• Payment of expenses
• Accounting and compensation options
• Crummey and Hanging Powers
• Testamentary trust phrases and other distribution options
• Administrative provisions
• One-time data entry of information on lifetime, remainder, and contingent beneficiaries, primary and alternate trustees, and testamentary trustees for use in all documents and correspondence.
• Generation of specific correspondence and documents to fund the trust including asset screens allowing you to enter detailed information on the assets that will be used to fund the SNT. This information will be automatically carried into correspondence, deeds, and other documents where appropriate without duplicate data entry.
• Generation of state-specific deeds conveying real estate to SNT
• Generation of the Supplemental Needs Trust and:
• SS4 Form with cover letter
• Schedule A
• Mini-certificate
• Certificate of Trustee Authority and Power
• Invoice
• Covers and Envelopes
• Correspondence to settlors, trustees and beneficiaries, and letters regarding gift tax requirements, life insurance and other assets

Creation of a Supplemental Needs Trust within a revocable trust or will or provisions to pour assets into an existing SNT: This option allows you to create your SNT directly within your revocable trust or will, or to include provisions within the revocable trust or will to pour assets into an existing SNT. Phrase options include various selections for:

• Funding options including percent or amount of proceeds from revocable trust or will to fund one or two SNTs
• Option for all proceeds of revocable trust or will to fund SNT, or only part to SNT with balance pursuant to plan of distribution for net proceeds
• Option to fund the SNT either before or after application of estate tax provisions
• If two SNTs are created, options to allow assets remaining in one to be added to the other SNT, or to be added to revocable trust net proceeds or residue of the estate if a will is utilized.
• Options for SNT trustee distributions - flexible or restrictive
• Guidelines for degree of detail in trustee distribution provisions
• Authorization to obtain housing
• Administrative options
• Accounting and compensation options
• Integration with other administrative and distribution options included within the revocable trust or will.

Drafting checklists are available for the standalone SNT module as well as an addendum checklist for an SNT created within a revocable trust or will. The checklists may be downloaded from Cowles Members Only.

Call us today at (800) 366-1730
or email us at west.appsupport@thomson.com
if you have any questions or would like more information on the Cowles system.

See all articles in current issue