Creating a Special Needs Trust In New York

By February 10, 2019 December 18th, 2019 Estate Administration, Estate Planning, Estates, FAQs, Trusts

Life with special needs can be challenging enough without the added challenge of figuring out how to afford the costs related to those special needs. While governmental benefits such as Supplemental Security Income (SSI) and Medicaid can be invaluable life-savers to those with special medical, psychological, or developmental conditions that make them unable to work, the income and asset standards which must be met to qualify for those benefits are highly restrictive. In order to afford the costly rehabilitative, therapeutic, and medical expenses associated with special needs, without risking ineligibility for government benefits, some families have found a solution in the special needs trust.

A special needs trust provides a way for persons with special needs to be supported financially without actually receiving the funds which would otherwise disrupt their invaluable government benefits. If you’ve ever sought to support a family member or loved one with special needs, you may have been confounded by the individual’s inability to receive cash gifts of any substantial amount without impacting their benefits. A special needs trust can be the perfect vehicle to benefit the person with special needs under these circumstances. The person who manages the special needs trust is called the trustee, and he or she is permitted to utilize funds for the benefit of the special needs beneficiary only in a manner that does not interfere with government benefits. The trust funds are to be used to supplement, but not supplant, government benefits. So, for example, depending on the particular circumstances and government benefits of the special needs person, the trustee can expend funds to pay for furnishings, clothing, educational programs, purchase a car for the beneficiary, pay for services not otherwise covered by Medicaid, and even purchase a residence. The idea is to use the trust funds to enhance the beneficiary’s quality of life and provide goods and services to help that person reach his or her maximum potential. The Social Security Administration and Medicaid guidelines are very specific as to certain terminology and provisions in these trusts, and thus, great care must be taken in drafting these trusts in order not to run afoul of regulations.

Special needs trusts can be used to benefit persons with either short- or long-term disabilities, and can be drafted in such a way that the trust can be terminated when the trust ceases to be in the beneficiary’s best interests. It is important to keep in mind that once a trust has ended, either because the beneficiary is no longer disabled, or it is no longer in the beneficiary’s best interests, or because the beneficiary has passed away, the trustee may be required to use remaining trust funds to reimburse Medicaid for medical coverage provided to the beneficiary. A New York trust and estate planning attorney with knowledge of the Social Security Administration and Medicaid rules and regulations can help you determine the best method to create and implement a special needs trust.

If you are in need of experienced, detail-oriented, and effective legal assistance with your will or with the creation of a trust, contact the Poughkeepsie estate planning attorneys at Van DeWater & Van DeWater for a consultation, at 845-452-5900.