Creating a Supplemental Needs Trust in New York State? Read This

Questions about supplemental needs trusts? New York attorney Jules Haas has answers.

Individuals with special needs require care and advocacy well into their adulthood. A large part of advocating for special needs individuals is making sure that they are not denied the social services they will need throughout their lives. It is never too early to begin the process of special needs planning.

With a supplemental needs trust, New York families and guardians can create a financial safe haven for a person with special needs without leaving that person ineligible for SSI and Medicaid benefits.

In fact, the first supplemental needs trust was in created in New York in 1978. We live in a state with a history of options for our special needs citizens and their families. Learn more about New York supplemental needs trusts below in the Q&A section.

Q. Who qualifies for a supplemental needs trust in New York?

A. The beneficiary of a supplemental needs trust must be a person with “a severe and chronic or persistent disability.” The New York State Estates, Powers and Trusts Law Section 7-1.12(a)(4) provides the following definition: “Person with a severe and chronic or persistent disability means a person: ( i) with mental illness, developmental disability or other physical or mental impairment; (ii) whose disability is expected, or does, give rise to a long-term need for specialized health, mental health, developmental disabilities, social or other related services; and (iii) who may need to rely on government benefits or assistance.

If your child/ grandchild has a condition that requires lifelong treatment or support, and may need government assistance, a supplemental needs trust is New York estate law’s way of ensuring that your child receives assistance without being deprived of whatever gifts or savings you want to give them.

Q. Does it matter whose money goes into a supplemental needs trust in New York?

A. If the money in the trust is the beneficiary’s, from an inheritance, court settlement or other source, it is considered a “self-settled” supplemental needs trust, meaning that it is established by the beneficiary for their own use. They are not the trustee (the person who manages the trust), but it is their money.

A “third party trust” is established by a parent, family member, or friend of the beneficiary, using their own money to fund it.

The most important difference between self-settled trusts and third party trusts is that with a self-settled trust any funds left in the trust after the beneficiary dies must be used to pay back Medicaid. There is no payback required in a third party trust.

Q. Will there be any consequences for me in terms of Medicaid and SSI benefits if I set up and fund a trust for my loved one with special needs?

A. If you are the parent, you can put money into a lifetime SNT (supplemental needs trust) for your child without being considered ineligible for Medicaid or Supplemental Security Income, as long as the money is for your child’s sole benefit.

If you are a friend or relative, you can put money into the beneficiary’s trust without being considered ineligible for Medicaid, as long as the beneficiary is not yet 65.

There are similar caveats and clauses throughout the laws that govern New York supplemental needs trusts, and as with all estate and trust law, the laws are subject to change. The laws are intricate, the government benefits necessary, and the costs of assisted living increasing.

To create effective special needs planning, it really does “take a village”—a trust and estate lawyer, caring advocates, family, healthcare professionals, friends, and the beneficiary himself or herself.

Choose an estate lawyer experienced in the creation of supplemental needs trusts in New York. Contact Jules Haas today for a free consultation at tel: (212) 355-2575 or email: jules.haas@verizon.net.