Generally speaking, a special needs trust is going to be set up to last indefinitely. The trust may be in place until the beneficiary passes away.
With a third-party special needs trust, the beneficiary does not own the assets. They are transferred into the trust by someone else, and so there is no government payback requirement when that person passes away.
With a first-party special needs trust, the beneficiary may own those assets first. The assets are then taken from their personal estate and put into the trust, which can help protect government benefits. However, some level of reimbursement may be necessary when the beneficiary does pass away. In both cases, that is when the trust expires.
Could there be an expiration date?
Rather than setting up an expiration date, the other way that a special needs trust typically ends prior to the beneficiary’s passing is simply if it runs out of funds.
For instance, there are cases where a large inheritance is being placed into an SNT, and it is going to last for the rest of the beneficiary’s life. The trustee will have to address what is to be done with the funds once the beneficiary has passed away and no longer needs them.
But in other cases, the inheritance could be much smaller. The trust is being used to preserve government benefits. However, the funds may become depleted after just a few years, ending the trust, even though the beneficiary is still alive.
It is important to consider all of these different factors when establishing a trust, and trustees who have been assigned to them need to know exactly what steps to take. It can help to work with an experienced attorney through these various stages.